Microloans: affordable financing for entrepreneurs
CEB's loan to microStart, a leading microcredit institution in Belgium, helps entrepreneurs get much needed finance to kick-start their business
Nohemi Godeau-Moreno brought home-cooked Peruvian food to the Brussels dining scene.
The 49-year-old used to work in the restaurant business in her native Peru, but struggled to find and keep employment in Belgium, where she moved with her husband. The € 8 000 microloan from microStart was what it took to realise her dream and open her own restaurant, Machu Picchu El Huarique.
Partnering with microStart
Godeau-Moreno is one of the beneficiaries of microStart, a leading microcredit institution in Belgium and in Europe. Founded by Adie, BNP Paribas Fortis and the European Investment Fund, microStart has financed nearly 2000 entrepreneurs, mostly unemployed and migrants. The microloans, with an average value of € 7500, are successfully repaid.
The CEB is supporting microStart with a € 6 million loan. It is expected that between 1000-1200 micro credits will be approved per year. The beneficiaries are self-entrepreneurs, many of them unemployed, aged between 30 and 40 years. Some 150-200 volunteers permanently provide technical assistance to microStart’s clients and organise group trainings, expert meetings and individual coaching for free.
Finance adapted to the needs
Godeau-Moreno had been on welfare when she applied for a microloan. She used to work as a kitchen apprentice in Hotel Conrad in Brussels, but was laid off as part of staff reduction measures and unable to work ever since. In her situation, she was unable to obtain a loan through regular banking.
Exclusion from banking services is a major obstacle to the launch of new business activities and is mainly concentrated among the poor and socially marginalized.
Many small businesses lack access to financial services in spite of a dense and competent banking network.
The ability of the banking system to reach and serve MSMEs is crucial for economic growth. The CEB’s loan to microStart will make it possible for entrepreneurs like Godeau-Moreno to get financing adapted to their needs.
Micro, Small and Medium-Sized Enterprises: CEB Financing and Its Social ValueFull study Published: April 2013 Download