Micro credits
Micro credits are small loans with a big effect. They are based on the principle of trust and personal responsibility. To believe in people in turn strengthens their self-esteem.
However, micro credits are no charity. They have to be paid back in time and interest is charged. They are characterised by:
- Small credit sizes: typically between 50 and 5,000 Euros.
- Short maturities: generally between 3 months and 3 years.
- Amortization of principal and interest rate in many small installments.
- Personal relationship between the microfinance institution and the client with frequent personal visits.
- Detailed knowledge of the living circumstances of clients as a replacement for collateral.
- Micro credits are an incitement for economy:
- Money does not dissipate but work.
- Money is paid back and handed out again.
- This dynamic cycle enables more and more people to escape