Micro-financing of up to 25,000 is activated for those who do not have access to loans through banks. Who will be able to grant them and what role will the Bank of Greece play?
The Bank of Greece is preparing to give the green light for the creation of a new network, with small institutions, that will grant credits to businesses that do not have access to bank lending. This is a new legislative framework that was recently passed for micro-financing, up to 25,000 euros without the obligation of collateral.
The last outstanding issue is the one concerning the supervision of the institutions and bodies that will grant micro-financing. Given that banks will stay away from the institution, as the regulatory framework does not allow them to grant loans without collateral, the challenge now is who will be involved in this process.
Who will be able to recommend the institutions?
A micro-financing institution will be able to be set up by natural or legal persons, after evaluation and authorization by the Bank of Greece, in order to ensure both the origin of the funds and their use.
Foreign natural or legal persons may also participate in (or be founded by) micro-financing institutions, provided that they are based in Greece. - Persons belonging to the public sector may participate in the said companies, but with a percentage that does not exceed 60% of the company's capital. A minimum initial capital of 250,000 euros is required from micro-financing institutions at the time of licensing.
Throughout their operation, microfinance institutions are required to maintain equity at least equal to the initial capital.
The maximum credit limit that will be granted is 25,000 euros. The activities that will be covered by micro-financing will concern investment or working capital needs, equipment or rental needs, guarantees, and even training costs. The range of covered activities includes both micro-professionals who are unable to continue their activity without new financing and unemployed people who want to join economic production.
So who will be the beneficiaries of micro-financing?
- very small businesses
- natural persons for the establishment of very small businesses
- the natural persons exercising individual business activity
- people who want to be trained to enter the labor market
- the people who belong to vulnerable social groups
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