Understand everything about personal or professional microcredit

As they say, we often only lend to the wealthy … at least to people with a stable and financially sound situation. You don’t have the right profile and you have been denied several bank loans? Personal microcredit can be the solution for you.

Get out of precariousness

If you want to buy a giant high-tech TV or brand new sofa, go your own way. This system aims to support social or professional integration projects for people excluded from bank credit due to their low income or precarious situation. Therefore, very often it is a question of financing the purchase or repair of a car to be able to go to work or even just to be able to get the license, but also, why not, training (if not having a well-personal training account stocked). On the social side, personal microcredit can allow the energy renovation of housing, when dedicated aid is not sufficient, to pay for unpaid health care, to finance a move or simply to stabilize one’s budget.

Are you planning to create, buy or consolidate a business? This time it is a so-called professional microloan that will give you a boost. It can be a “general” loan that will replace a traditional bank loan and will allow you to obtain a substantial sum in exchange for an interest rate often slightly above the market average. On the contrary, the “equity nature” loan is added to the bank but can be granted without interest.

A social intermediary

Rather than going through the traditional banking system, this system first requires you to contact a social support service, which will study the relevance of your project and then act as an intermediary with a licensed bank. The Red Cross, Emmaus, Rural Families, Catholic Relief Services, the National Union of Family Associations (Unaf) or the Restos du Coeur are competent here. If you are more interested in setting up a business, you will need to contact France active, Initiative France or Réseau entrepreneur. Finally, you can contact directly the Association for the right to economic initiative (Adie) or Créasol (Credit-accompaniment-solidarity), two associations authorized to distribute micro-credits.

In the event of a positive response to your application, you will be able to obtain up to 8,000 euros, to be repaid in seven years, as part of a personal microcredit, with a decree of 4 February 2022 which raised the ceilings. Previously, this envelope was limited to € 5,000 over five years. The conditions of the professional version, on the other hand, have not changed: up to 12,000 euros repayable in five years. Note that while these loans do not impose administration fees, they are still subject to an interest rate often ranging between 1.5% and 4% for a personal project, and much more for a professional project. The Banque de France listed 197,500 professional microloans and 97,700 personal microloans at the end of 2017, with an average amount of 9,700 euros for the former and 2,660 euros for the latter.

serious borrowers

If these loans are aimed at a poorly resourced public, they do not exempt it from paying the debt. Each network of microcredit distributors therefore establishes its own rules for granting such financing. At the top of the list, situations of over-indebtedness are excluded. Likewise, the organization systematically ensures the borrower’s repayment capacity in order to best size the loan in relation to the rest of the life. Furthermore, in the case of professional microcredit, Adie asks, for example, that a relative guarantees 50% of the amount borrowed. Depending on the networks, other specific criteria may be imposed, such as seniority in the company and the number of employees in the event of takeover or consolidation.

In any case, a microcredit goes hand in hand with a follow-up over time by the association responsible for the practice, in order to guarantee the sustainability of the project.

Caisse des dépôts created the France-microcredit.org portal to provide information on this system. In particular you will find the contacts of most of the associations involved in this sector.

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