Since the beginning of the year, commercial microcredits have been funded by the Federal Ministry of Labor. The demand is huge. Capacities are not yet sufficient. In order to meet the demand, however, there is less money for the time being than qualified advisors.
Microcredits are loans over a maximum of a few thousand euro
The Federal Ministry of Labor has set up a fund of 100 million usd to finance microloans. Microcredits are loans over a maximum of a few thousand usd, which serve to establish a business and give people the opportunity to make a living themselves.
The loans are not granted by state institutions, but by accredited microfinance. The fund will lend up to $ 20,000 per borrower. The target group is mainly located in the service sector. Here the capital requirement in the course of a business start-up is often small. The founders, however, often come from unemployment and have no or very few resources.
As accredited microfinancers, founders’ networks, business consultancies and local business support work when they meet the technical and structural requirements required by law. The loans are settled via the bank, which is based in Bochum. The accreditation is carried out by the bank. So far this has aMIDtted only 17 intermediaries.
Microfinance has been possible since 2006. From 2006 to 2009, loans totaling over 3 million usd were granted. This year alone, it should be 900 loans with a maximum of 18 million usd. The reason for the sharp rise in demand can be seen in an innovation: The microfinance brokers have been paid since the beginning of the year. Their amount is not measured by the lending volume, but by the amount that has been successfully repaid.
Rate of microcredits
The bank wants to promote the accreditation of intermediaries and thus identify the lending. By 2015, 15,000 microcredits will be awarded in cooperation with the Bank.
The loans earn 7.5 percent pa and run for a maximum of 3 years. On average, the loan amount used amounts to 6,000 usd. The repaid funds are available to the Bank for renewed lending. According to the MID, the default rate of microcredits is low at less than 3 percent.
Potential founders may submit their business ideas to certified microcredit intermediaries. If they consider the concept to be sustainable, they issue a recommendation on lending, which the Bank generally does not object to. Bank collateral plays a smaller role in small loans than is the case with ordinary commercial loans by banks.
The idea of microfinance comes from the Third World.Studies that providing minuscule income can help poor people in developing countries to significantly improve their economic situation. He founded the Grameen Bank, which still lends microcredits to people in developing countries today.