Microcredit loans are loans meant for those who cannot qualify for loans from traditional large financial institutions. The loan terms are designed to mainly help those who only need a small amount of capital to facilitate their microenterprise.
Often, microcredit is organized around "solidarity groups" or "chamas." These groups are comprised of individuals in a community who want microcredit loans. The purpose of such groups is to create a feeling of community, provide a network for support and discussion, and back up one another’s loans. Since microcredit loans do not require traditional collateral, the members of the group act as insurance for each other’s loans—if one person defaults on a loan, the group members pay it back. Generally, before anyone in the solidarity group or village bank can get an additional loan, all members of the group must have their initial loan paid off.
- Contact details.
- Copy of ID/ passport.
- Proof of income/Bank statements – latest 3 months.
- Letter stating that you are a member of the registered group/chama (for groups only)
Benefits and more on microcredit loans
Microcredit loans are very good for individuals who do not have a personal credit history or a business credit history but are members of a financial help group. Other group members serve as a security to your loan.
You can apply for a microcredit loan from patamkopo platform here.