Women, young people, immigrants : thanks to microcredit, they create new businesses in services, in crafts, in manufacturing.
Reality that without the initial “push” of a small loan, they would never have seen the light.
Women are the ones to whom more than half of the Italian microcredit funds are assigned, young people absorb one fifth and immigrants, cross-sectional to the latter two, represent 46% of microcredit beneficiaries.
This is what is revealed by a monitoring carried out by the National Microcredit Organization (ENM) on behalf of the Minister of Labor. It shows that this form of financing, simple, without guarantees and without too much bureaucracy, can be effective.
Microcredit is a loan that is of a small economic entity and is paid to those who have the most difficulty in accessing normal financing channels such as banks or finance because they are weak or unable to provide economic guarantees.
With micro-credit, two strands of intervention are financed: the ” emergency ” one for out-of-pocket expenses, and the ” entrepreneurial ” one for creating business and employment.
The National Microcredit Authority has examined all the microcredit initiatives that associations, institutes, non-profit organizations, and banks operate in Italy, and has discovered that, once the number of microcredit beneficiaries has been reached, an average of 143 people are employed. In short, for every two beneficiaries, three find work.
Too bad, however, that the volume of microloans in Italy is very small. Out of a population of around 60 million inhabitants, there are just (2012) 106 initiatives on the subject. They work a lot – it should be noted – because they provide a total of 7,167 micro-loans, for a total of over 63 million USD.
However, the potential market for microcredit applicants is more than double: today these 106 initiatives cover just 45.9% of explicit demand.
What is this microcredit for?
Most of these loans, over 70% – seven out of ten – are granted with a social-welfare purpose. That is, it goes to finance current expenses for subsistence, such as health, food, utility bills, studies, and the home. But 30% is invested and creates new jobs.
The report of the National Microcredit Authority shows how these funds go to create, mostly, autonomous business activities, with jobs that are not too complex and to perform which do not need high qualifications or specializations with basic legal forms, and a fairly narrow sales potential market. Nine times out of ten these are services, the rest is divided into craft and agriculture companies. Realities that perhaps will never become big companies, but that show how the spirit of initiative, if supported by a flywheel like microcredit, can create employment and work.
What happens in Italy
In our country, microcredit is regulated by the Consolidated Banking Act (Articles 111 and 113), and a distinction is made between all other types of loans due to the presence of an external guarantee fund. This is because, like any financing, even with microcredit there is a risk that those who contract the loan will not be able to repay it. And to counteract the fact that it is still modest figures (maximum 25 thousand USD) is the fact that they are paid to subjects at risk of insolvency. For this reason, funds are collected from organizations and associations that then flow into the microcredit guarantee funds. They are managed by financial intermediaries who, each time a microcredit is issued, set aside the resources to be used to cover any repayment.
The new microcredit initiatives
One of the new micro-credit initiatives that we report is that addressed solely and exclusively to women and is called “Get back to you! Beautiful enterprise to be a woman”. This is a female microcredit project aimed at encouraging the start-up of new companies: they have launched, in collaboration with each other, the National Microcredit Body and the Ministry of Labor and Social Policies.
The project wants to remedy one of the major limits of the Italian credit system, which – numbers in hand – is shown to penalize more women who want to set up their own company than what happens with men entrepreneurs: women are asked for higher interest rates, you give less money and ask for more guarantees.
“Get back to you! Beautiful enterprise to be a woman”, is aimed at unemployed women who have ideas and entrepreneurial spirit in the field of commerce or in the world wide web.
One of the two funding channels can be requested:
- business microcredit aimed at encouraging the start of self-employment;
- + company, the loans cannot be greater than 25 thousand USD, and assistance and monitoring services are also provided.
For social microcredit the contributions will not exceed 10 thousand USD and the accompaniment of family budget services is foreseen.
The money comes from various associations and companies; the guarantee, through a hedge fund, is provided by the National Microcredit Agency which also provides services such as business plan evaluation and guidance.
All information can be found on the Internet by connecting to the www.microcreditodonna.eu website. The deadline for submitting applications is November 30, 2013.