We support the start-up and growth of small businesses through microcredit programs that combine access to finance with supplying the fundamental skills and networks they need for growth. Our new microcredit program goes beyond the regular commercial relationship between a bank and a business customer. Instead, it aims to create a support network that binds together the bank, our partners and volunteers, helping our customers through specific mentorship programs.
Microcredit is a short-term or medium-long term financing instrument that does not exceed the amount of EUR 25.000, aiming at financial inclusion and helping to form and develop small companies and micro-enterprises. Unlike other financing products with similar characteristics, microcredit, in the context of Social Impact Banking and according to these rules, is a product dedicated to customer groups that have difficulty accessing traditional financing services.
The clients to whom they are addressed are small companies and micro-enterprises that are at risk of financial exclusion. The precise target segment is defined by each bank based on the local market and social circumstances, as well as the local business strategy provided that the financed company does not exceed EUR 2 million annual turnover or assets and has less than 10 employees. The product can be targeted to specific categories, such as women entrepreneurs, family farms and start-ups or other categories that at the country / region level may be at risk of financial exclusion.
Given the inclusive nature of the product, when possible and only in compliance with the applicable credit risk policy and at the same time using risk hedging tools (eg guarantees), microcredit products can be extended to high risk categories.
Product offer
The value of a single loan will not exceed EUR 25.000
Maximum maturity: 5 years + grace period
Product type: working capital line or investment credit
Microcredit financing is offered at a competitive price - at the level of the offer of the best players on the local market. The price level and the price configuration tools are managed entirely by the local bank.
No real guarantees will be requested from the clients, however the bank considers requesting an external guarantee for this product.
Non-financial characteristics - we include in the offer additional non-financial services that accompany the microcredit products as follows:
- assist potential clients in preparing the credit application and on the economic and financial plan, relying mainly on the complementary support of third parties such as partners, volunteers, associations, etc. The support of third parties is based on volunteering, it must not be remunerated by the bank or by the client.
- complementary support to the client in the post-use period for the development and consolidation phase of the financed initiatives (eg complementary services, tutorial, trainings on management aspects, etc.)
Service Model
Partnerships
The Bank may use partnerships with trusted external organizations that share the inclusive mission of the Social Impact Banking initiative to access the target group and provide non-financial support (including but not limited to assistance in developing the credit application and/or preparing business plans). These may include social or innovation centers, the organization of business networks, cooperatives, public or private non-profit organizations.
The support given by partners or third parties is based on volunteering and must not be remunerated by the bank. Any service that is to be paid for by the client must be agreed and formalized in advance between the partner and the bank.
Support from Social Impact Banking volunteers
Given the alleged vulnerability of micro-enterprises and their competencies, the service model may include free support from volunteers in providing financial services or other specialized expertise in the post-use period.
