Micro-finance has developed widely and no longer only concerns micro-credits for people living in the South. Back on the democratization of this phenomenon of lending small amounts of money for targeted projects.

It is now possible to become a banker thanks to micro-finance. Muhammad Yunus, said the banker of the poor, is at the origin of the notoriety of the microcredit, which consists in lending sums not exceeding 3 000 € at zero rate, to those not having access to the traditional loan. Since then, micro-finance has largely developed and no longer only concerns micro-credits for people living in developing countries. Back on the democratization of this phenomenon of lending small amounts of money for targeted projects.

Philanthropic loans to Southern countries

Philanthropic loans to Southern countries

Linking investors and people excluded from the bank loan system is now possible through websites such as Babyloan.org. Are eligible for the loan, entrepreneurs from the South, having a viable project, likely to generate gains.

The creditor is assured of recovering the entire amount lent, thanks to the intermediary institution which guarantees the borrower. On the other hand, all loans are at zero interest rates. These are philanthropic loans, differing from the donation itself, but which brings no gain for the investor.

Funds dedicated to microfinance

Funds dedicated to microfinance are now available in France. The Financial Markets Authority (AMF) has approved this type of financial products and has granted ResponsAbility a license to distribute three microfinance investment vehicles to qualified investors in France. These funds help expand the financial sector in areas where large segments of the population do not generally have access to financial services.

For the first time, funds dedicated entirely to microfinance can be marketed to qualified French investors. You can not subscribe to this type of funds directly, but it is possible to invest in these funds through a wealth management advisor (CGP).

Credit between individuals is growing in France

 Credit between individuals is growing in France

In France, lending between individuals is growing more and more. It is sufficient for the two parties to draw up an act specifying the terms of repayment. True guarantee for the lender, the act is mandatory for sums above € 760, otherwise a court may consider the transaction as a gift. Any income earned from a loan between individual, must be reported to taxes.

The interest rate not to be exceeded is recalculated quarterly by the Banque de France according to changes in the use of credit. To date, the maximum is set at 133% of the average effective rate applied by credit institutions for transactions of the same category.

For example, in Q4 2015, the average effective rate of a fixed rate loan was 2.97%. In this case, lending at a rate of 133% higher than 2.97%, or 3.95%, would be illegal. Finally, good to know, from the moment an act is signed between two individuals, the creditor has 30 years to assert his rights.

Small loans more interesting than booklet

Small loans more interesting than booklet A

The loan crowdfunding, also called crowdlending is in full swing. It relies on the linking of entrepreneurs, creative people (or any other project promoters) on a dedicated platform who are in need of cash with investors, individuals or professionals, who will lend them money for compensation..

This is a real revolution in credit since this method of financing was formerly reserved exclusively for banks. By lending directly to businesses, individuals can now participate in the real economy while enjoying a new investment mode.

But crowdlending has also developed widely for loans between individuals. So you can turn to crowdlending platforms that specialize in peer-to-peer lending, such as Union Loan or Hello Thanks.

If you are a lender, you estimate the amount you want to lend and if you are a borrower, the one you want to borrow. To secure the loan, most platforms that offer loans with an interest rate like Union loan, invest your money with several borrowers and no longer with a single project. The platform is also responsible for obtaining guarantees to determine the viability of borrowers. The rate of return varies depending on the time you lend money. As an investor, the best rate of return on Union loan amounts to 4.5% to 7% per annum for a 5-year loan term. Whether via a loan between individuals or zero rate as Hello Thank you, it is now possible to lend or borrow money without going through the banking system.

It may be wise to get out of his book A few thousand euros asleep that report little, and take the risk to inject into concrete projects, while hoping to reap the benefits of his investment. A good anti-crisis gesture! Be careful though, if the yield is high, so is the risk.

The information of Crediteriol and its publications are given for educational purposes. In no case do they constitute investment recommendations. The reader should study the risks before making any transaction. He is solely responsible for his investment decisions.