Microcredit is a type of loan of small amount and short duration that is usually granted to people with a low level of resources, they do not have guarantees and, therefore, they are excluded from traditional banking.
Microcredits are aimed at people who cannot request a loan through traditional systems, such as banks, because they do not meet the requirements.
They consist of loans of a reduced amount and of short duration focused on promoting these entrepreneurs, who, having a business project, lack the necessary capital, or to solve small unforeseen events in family economies.
Microcredits can generally reach up to 3,000 euros. They tend to be of a greater amount than mini-credits, which are loans of less than 900 euros.
The concept of microcredit was born in 1960 by the hand of economist Muhammad Yunus, founder of the Grameen Bank and considered the father of social microcredits. However, it was not until 1992 that this Bengali put them into practice in his country of origin, India, on the occasion of a natural disaster.
It is important not to confuse microcredit with microfinance. Microfinance is a set of services and products, including microcredit.
How to access a microcredit?
Both public and private entities can grant microcredits, but it is the latter that have had a boom in recent years.
Depending on what the microcredit is intended for, the characteristics and conditions of the loan will be different. Financing a business will not be the same as an appliance. However, if the business idea is promising, you can get preferential conditions. The amount that can be requested and the term of repayment of the loan vary according to the issuing entities.
Microcredit in Spain
Microcredit in Spain has two important peculiarities: first, it is a credit without guarantees, although there are different strategies to replace them, either through in-depth analysis of projects or through the presence of support entities; second, the loan is primarily geared towards productive activities.
At the same time, there are several microcredit management institutions in Spain
- Social entities that mediate with savings or alternative financing entities. Thus, they grant microcredits from the paid savings of other natural or legal persons.
- Social entities that do not mediate with savings. In this case, the microcredits come from non-reimbursable funds obtained in the form of donations and grants.
- Private credit institutions, whose funds for microcredit have a banking origin.
- Public credit entities, with funds for microcredit from the market and with shared risk with other private credit entities.
The European Commission affirms that a microfinance company must be sustainable, efficient and effective.
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