Microcredit: What is and when to use

Although not a novelty, the term microcredit in Brazil has been broadcast a few years ago and you have probably already seen posters in banks offering it. The intention is that it be a source of resources for microentrepreneurs to start or boost their business, with the advantage of offering better terms of payment at lower interest rates.

Microcredit has the power to strengthen the economy, after all, smaller companies also generate employment and income. In Brazil, both the government and the banks have discovered this small business force. Today, one of the main stimuli to microentrepreneurs is precisely this source of resource capitation. Here, this type of credit became viable only after 1994, with economic stabilization.

What is the value and who can use microcredit?

What is the value and who can use microcredit?

The amounts granted by microcredit are low. The average loan amount is around R $ 1500. But the limits vary and can reach up to R $ 5 thousand. But do not get the impression that the taking of credit follows the same logic of the other modalities offered by the market. Microcredit has a clear purpose and follows specific rules. The goal is to stimulate business for low-income (formal or informal) entrepreneurs. Money can serve both as start-up capital of a venture and as working capital for investment.

How it works?

How it works?

To meet all the entrepreneurs who need the money, the criteria for granting credit are also lighter. Unlike conventional lending practice, which involves prior approval, microcredit does not require the same bureaucratic procedures. This means that it is not necessary to give real guarantees, such as proof of income, for example. This, on the other hand, does not mean that the banking institution does not make an assessment of the client’s values ​​and needs.

Another feature of microcredit is agility, which ensures the transfer of funds in a less bureaucratic way. In addition, the transaction also has lower values, which facilitates the payment of installments.

Assessment and guidance accompany microcredit


Precisely because it does not collect guarantees common to other types of loans, the bank needs other certifications, including to determine what is the most adequate amount to meet the expectations of microentrepreneurs.

When loan applications are requested, credit agents go to the place where the entrepreneur acts, even informally, to study the needs of the business and structure payment terms that are in accordance with the borrower’s possibilities. Often, the microentrepreneur is oriented to improve management and financial controls, accompanying business development. Therefore, it is worth structuring a Business Plan that can synthesize the characteristics of the company, prospects of billing and expenses, besides the operational model. This document will help both you and the credit agent understand the financial management of your business.

Are you thinking of opening or expanding a business? So be sure to check out what microcredit can do! But first, research several financial institutions that can offer you and choose the one that fits the one you need in your company.


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