Small Business Loans to Start Your Business


Small Business Loans to Start Your Business

small business loans or small capital or advances in wedding occasions such as marriage, circumcision or occasions of joy such as death, disease, disasters and others … Mechanisms known and known since ancient times in most peoples of the world, with different names and different methods according to customs, traditions and religion. Nevertheless, in its current capacity this mechanism has been in operation for more than 30 years, especially through NGOs and NGOs in many countries in Asia, Africa and Latin America

Mica, founded small business loans the first private bank to lend to the poorest villagers in Bangladesh Professor of Economics at the University of Chittagong, after a pilot phase. In 1977, he started establishing the first branch of the Bangladesh Agricultural Bank (Krishi Bank) (Grameen Branch of the Agricultural Bank) Grameen Bengali means rural or village) in a village near the campus of a town called Chopre, which is populated by poor farmers and simple craftsmen

The experiment extended to the interior of the country on 6 June 1979 in the area of “Tangla” near the capital Dhaka with a concentration of nineteen branches

In 1982, the small business loans program launched in three years to include five Bengali regions

Dhaka in the center of the country

In the south-east

Rampur in the northeast

Patuakhali in the south

Moreover, transportation in northern Dhaka. To date, more than 60 million people have benefited from this type of loan worldwide

The end of the experiment not officially completed on October 2, 1983. Graeme Bank was a private bank now owned by 94% of small business loans, most of them women and the remaining 6% owned by the Bangladeshi state. A bank to lend to the poorest of the poor without collateral, founded its principles against the classic commercial banks

He has released small business loans from the bondage of the guarantee of the right to obtain a loan from human rights according to his opinion

From less than 15 thousand borrowers in 1980, the number of members of the bank in February 2007: seven million members distributed over one million and 107 thousand groups and 124 thousand centers, the bank’s branches amounted to 2.381 branches covering more than 75 thousand villages in Bangladesh, The number of employees and the bank’s tires exceeded sixteen thousand

The Bengali experience is one of the most successful small business loans in the world and has become an example in many countries see Bengali Experience

Today there are thousands of small business loans

in the world that include:-

Small Business Loans to Start Your Business

Local loan and savings funds

Non-governmental organizations and associations

Cooperative banks

United Nations Programs

And other initiatives with the same general principles ie

Targeting the poor

Small business loans

Reasonable interest rate

Individual initiative and private sector

Solidarity and Group Assurance

What small business loans

Small business loans in the language given to be returned after a period of collection and loans the microcredit mechanism to bring capital to categories beyond the scope of interest of the banking and financial business

The concept of small business loans varies from one institution to another and from country to country, which makes every experience in this field worthy of study and attention. To get closer to this mechanism and to define it, we can recall some of the characteristics of these experiments

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Goals small business loans

The goal of small business loans to create Graeme Bank was to help everyone reach their full potential. First, it was a mechanism to free people’s dreams and help the poorest to preserve their face and give meaning to their lives. To lift its citizens out of poverty and eliminate its causes.

The American-Italian experience has gone beyond this goal to the development of small and medium enterprises and to help them contribute to the real economy

Years of inflation and structural reform programs for debtors such as the International Monetary Fund (IMF) and the World Bank have increased poverty in this region, especially after the privatization of many public institutions and the fiscal deficits of their budgets. Many of the wage earners found themselves on the street doing free work outside the regulated system

In the early 1990s, nearly half the economy of many Latin American countries was a parallel economy

Due to the lack of in-kind guarantees required from commercial banks and the high interest rates imposed by lenders, it was difficult for many entrepreneurs to obtain small business loans or bank facilities. In his writings on the marginalized economy, Hernando de Bosquet pointed to the phenomenon of exclusion of the poor from the capitalist system And the lack of access to bank financing for the absence of legal frameworks to prove ownership of the property of the poor in this area and thus made the property “dead capital” that they cannot provide as collateral for commercial banks

Small business loans for small producers and traders in the marginalized sector as well as small and medium enterprises

Small Business Loans to Start Your Business

Because of the growing demand for these small business loans, many microcredit associations have become banks

In Bolivia, in 1992, the Fundacin para la Promotions y DeBartolo de la Microamperes: Proem, a non-profit micro-credit association, became the first American commercial bank, BancoSolidario, to specialize in small business loans

Target Segment

All the small business loans agree to target people who refused by commercial banks because they are poor and have no income. The common belief is that the poor cannot repay any of his predecessors. Every additional financial income will inevitably meet his urgent basic needs. In-kind guarantees of value to the bank, in addition to the high administrative cost of the small business loans file compared to the money lent

Banks mainly targeted the poorest female component. Experts have noted that the traditional banking system refuses to deal with the poor and with women, let alone combine the two. The poor women’s chances of getting small business loans seem to be nil, so the experts wanted to be the largest proportion of bank customers. He noted that the small business loans for women contribute to the advancement of the family and improve the living conditions more than the loan granted to men, and more than deal with the woman in charge of repayment of the loan, today we find that 96% of the clients of Graeme Bank of women

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In Europe, the Tunisian Solidarity Bank has two-thirds of its youth, aged between 18 and 35, especially graduates of higher education and technical schools

Bolivian Solidarity Bank 78% of its customers are Indians and women

In industrialized countries such as France and the United States of America, the focus was on social groups with minimal social benefits, those who did not work part-time or half-time, as well as difficult young people from ethnic minorities and migrants

All experiments agree on human targeting and not small business loans, experiments that target people who have their dreams and ambitions. “I always ask bank employees to take care of the borrower, not small business loans, and consider him a full human being,” says in his book A World without Poverty

Small business loans range from $ 100 to $ 30,000 and more depending on countries and lending institutions

The first amount lent by Yanks in Bangladesh was in the range of $ 27 for forty-two beneficiaries

In Cameroon $ 250 a family of 5 people managed to plant oil palm trees and live in this activity

$ 70 enables a Mexican family to trade in cooking utensils

In industrialized countries, $ 20,000 is a small business loan that may not even allow a lucrative project to start

In France, the Small and Medium Business Development Bank (SME) is from 3000 to 8000 ARW and the promoter is required to seek supplementary financing from a commercial bank equal to at least the amount granted

As well as the initial network, which includes associations made up of businesspersons who contribute to small business loans from 12,000 to 45,000 riyals?

The Tunisian Solidarity Bank lends to the limit of 48 thousand dinars, in addition to a government credit in the form of an interest-free loan of 24 thousand dinars

Targeted Activities

All economic activities targeted by small loan: Agriculture trade Crafts Handicrafts Services Organized and marginal sectors in the rural and urban areas Graeme Bank intervenes in rural areas Unlike the Bolivian Solidarity Bank, which was active in urban areas

Guarantees

All experiences agree not to demand guarantees in kind and in person, such as commercial banks

Graeme Bank is the first to establish a system of solidarity groups based on the formation of small groups of five members of the outside of the same family aspirations and the same economic and social conditions This group is responsible for the best use of funds, but not required to pay the debt of the underdeveloped member, in the first phase two of the group get small business loans for a period of not more than one year. The loan is for a productive and non-consumptive work, and retrieved weekly during meetings in centers with a number of groups with an official from the bank. The first six installments are entitled to the use of their role by a loan and the role of the fifth, which is responsible for the group

Unlike European solidarity banks, it not based on the system of guarantee groups but rather on the equipment and equipment financed by it

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Elements of success for medium-sized enterprise finance and small business loans

Not all small business loans in the world are successful. There are institutions that have closed for a variety of reasons, including

End of government support

Expiration of the program

Bankruptcy and Incompetence

Financing conditions do not match investment needs

The success of any lending institution requires attention to the following elements

Do not confuse

The best example of this is the experience of the banks in their proximity to the small business loans and their keenness to extract their money while maintaining their financial well-being. In contrast to 1983,1991,1992, net profit was achieved

Programs aimed at creating and developing small and medium enterprises

The experiences of American Latin America fall in this context in the development of commercial banks that do not rely on guarantees in kind but on the cost of projects, saving savings and classic banking operations and the use of benefits on small business loans guarantee the profitability of the bank

Each of these programs has a different methodology and rules

Do not confuse

 Resources for small business loans

Resources for road infrastructure programs, drinking water, electricity, vocational training, resuscitation, incentive grants

Investments aimed at sectors with a long-term financial return should be either from resources whose donors not expected to recoup their funds, from the donations of artistic and sports events, or from the state budget or civil society

In the European experience of the National Solidarity Fund and the National Employment Fund, we have the best example

Pay attention to the financial institution’s profitability and maintain its financial balance

Vigo profit makes the financial institution

It continues its activity for many years

Improving its performance by investing in human, material and organizational resources

Avoids funding small business loans and thus avoids the waste of donor money, whether public or private

Management is empowered

The selection of managers and staff with technical competence (especially banking techniques) and human qualities (love of the poor, private individuals and young people).

Many successful institutions relied on the formation of their employees on the ground with the programs of private formation, stimulate small business loans, and avoided the rapid change of staff in the branches

How do we demand small business loans and poor financial institution to complain about malpractice and financial deficit 1. Programs aimed at eradicating poverty and improving living conditions that are based mainly on microenterprises

In fact, we fear that the beneficiaries of small business loans are borrowing to repay old debts. In many countries, this series benefits from the collusion of clients of MFIs, who do the number of loans granted and mechanisms of salvation reward. According to the sociologist, the creation of a structure or organization to consolidate all loans into a centralized information base would provide a guarantee that customers would not get small business loans from several different institutions, which could protect Tunisia from a spiral of over-dependence. “We must take positive and negative experiences into account, from other countries,” she said

 

 

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