Micro Credit is a loan in a small amount that is usually intended for people with lower-class economies that do not have collateral, permanent employment, a trusted credit history, and are unable to obtain ordinary credit. Micro credit aims to help them in entrepreneurship and get income that is useful for their lives. This type of credit is not a type of credit with a new procedure, but has been applied for a long time in economics. The concept of credit was initiated by Professor Muhammad Yunus who pioneered Greenmain Bank in the 1970s. The bank provides small loans to the poorest people in Bangladesh who are generally women who have no fixed income and are unable to apply for loans with conventional credit to the bank or other financial institutions because of the economic limitations they have.
Micro credit – form of solidarity with human beings in need
This credit is basically a form of solidarity with fellow human beings in need. So that people who have low levels of economy and education can still develop their abilities and skills and get a better life prosperity. There are so many opportunities for human resource development that can be explored by applying this credit system. People who have limited funds and cannot afford to borrow money with the conventional credit system have the opportunity to start their own businesses according to their abilities and skills. They can build a decent business and have income without being haunted by fear due to debt bondage.
This type of credit is included in loans or loans that do not require heavy conditions like other types of credit. Banks that provide this type of micro credit will usually determine the nominal limit of this loan to 50 million dollars. The bank will make sure this credit lender has a business that is being run. So before you apply for micro credit, you must first have a business that can be used as evidence, in addition to this type of credit must also have the support of collateral and objects for credit financing. If the two main conditions have been fulfilled, this credit can also be processed in accordance with the policies of the Bank. These credit borrowers are usually small entrepreneurs with various types of home-based businesses, such as small traders, farmers, and breeders.
Micro credit has benefits for these small entrepreneurs
By applying for this credit, you can pay it off by default every month. The repayment period is determined based on an agreement between the Bank and the borrower. Every month you will repay the loan principal along with the loan interest rate determined by the Bank. Loan interest rates on micro credit types are not as high as loan interest rates on other types of loans, the Bank will provide loan interest rate relief for its borrowers. That way the small entrepreneurs who apply for this loan can pay off their loans without being burdened by the amount of interest on the loan.
As a loan aimed at small entrepreneurs, this type of loan also has a sufficiently long time period of up to 2 years. If you repay the loan regularly and repay it in a timely manner, the Bank will trust you again if one day you apply for this loan. You also do not need to worry if you are experiencing problems so late paying this loan, the Bank will not set a fine for you. Micro credit provides many conveniences for small entrepreneurs to develop their businesses to achieve the desired success. With this credit, small entrepreneurs no longer borrow money from individuals or moneylenders who usually charge quite large interest and increase loan interest if you are late in paying your debts.
Micro credit is one way to provide opportunities for everyone
Micro credit is one way to provide opportunities for everyone to have a more decent and guaranteed livelihood. In the process, this type of credit also plays a role in advancing the economy by fostering small entrepreneurs through the businesses they run. Therefore, if you want to develop your small business into a more successful business you can immediately apply for this type of credit to banks or other trusted financial institutions that provide micro credit to small entrepreneurs.