Crédal Plus - A Case Study in Belgium

Transcription

1 Enabling low-income and financially-excluded consumers access affordable credit for basic goods and services This partnership project runs between Crédal Plus (social entreprise), the Walloon Region (public regional authorities) and the Belfius Foundation (private foundation related to a bank). In Belgium, many financially excluded people in low-income situations do not access basic goods and services to allow them to pursue a project in their life or to reach a minimum but adequate living standard. Via the personal microcredit developed, the specific objective is to allow clients' life projects to happen within a more broad objective of prevention against overindebtedness. 1

2 Partners Crédal - is a group composed by cooperatives and associations that has developed alternative social (micro)credits for organisations, entrepreneurs and people for more than 25 years. Active in the French-speaking part of Belgium, which include the Brussels and Walloon Regions, Crédal is the most active social operator. It proposes a wide range of credits: from mortgage (for social companies) to professional investments, from bridge credit to "working capital, from microcredit for business to personal microcredit (this last activity is concentrated in Crédal Plus association structure). Innovative, often leader in its field, Crédal is constantly enlarging its supply to meet the needs of excluded people/institutions from mainstream credit. The Walloon Region Department of Social Affairs in charge of the regional treatment of overindebtedness. For more than 25 years, this department has been involved in research and actions to develop an answer to overindebtedness. A well-structured social service has been created, at local, provincial and regional levels. In order to invest in an innovative tool to combat overindebtedness, the Region supports, since 2004, social / affordable personal credits' supply for excluded people. 2

3 Partners Belfius Foundation Since 2006, the Belfius Foundation has decided to support initiatives regarding the two following priorities: social integration and the underpriviledged's quality of life. This first priority translates to financial and human resources support for microcredit and social personal credit and the second priority is similar support for hospital palliative units. Crédal is the partner for microcredit in the French-speaking community and another Flemish institution, Hefboom, is the operator in the Dutch-speaking community. 3

4 ROLES Crédal Plus' role: Crédal has developed small amount credits for personal basic purposes for people excluded from mainstream credit supply, which incomes are under ceilings taking in account disposable income, renting charges and family structure. The credit amounts varies from 500 to , the APR is 5%. The money used for the credits is provided by Crédal, which signs the contract and does the social and repayment follow-up. The Walloon Region's role: The public authority supports the Crédal Plus activity via two key measures: subsidies for the activities (staff costs, rent,...) and a guarantee fund in case of credit default. A representative of the Region in included in the Credit Committee which decides on credit granting. The support of the Region is limited to the Wallonia territory. Belfius Foundation's role: The Foundation supports Crédal to enlarge its activity to the Brussels-Capitale Region. The Foundation provides subsidies to cover staff as well as operating costs and proposes a complementary support via volunteers. Belfius also has a representative in the Credit Committee dedicated to the Brussels area activities. 4

5 Some elements about Crédal affordable personal credit Amounts: Minimum: Maximum: Maximal duration for reimbursement (by law): 18 months for months from 501 to months from to months from to months from 5601 to months from 7501 to APR = 5 % for all the credit 5

6 Some elements about Crédal affordable personal credit Illustrations for 5% APR: Credit amount Nb monthly instalment Monthly instalment Total cost ,78 513, ,87 519, , , , , , , , , , , , , , , , , , ,92 6

7 Fees - NO Access conditions (maximum income? Type of purpose? Address,...); To access CAPIC credit, some formal conditions are required, to guarantee it is exclusively used by low-income / excluded from appropriate credit people. To access to such credit, people should be: social allowances beneficiaries (for a minimum of living, unemployed, on health/handicapped benefits, pension,...); or on low professional income (low wages, part time, short-term working contract, ) that are under the following «maximum» The net disposal income should be under : ,10 for a single ,60 for a couple once deducted: - the rent and/or the monthly instalment of a mortgage - 186,48 per child and or other adult of the household - the amount dedicated to pay the debts once a debt settlement plan has been implemented in a amicable out-of-debt procedure. 7

8 Some elements about Crédal Some essential documents are requested to fulfil the credit demand: - ID card copy - Income: 3 last salary slip / or unemployed attestation or other proof of social allowances of any kind (pension, health,...) - Budget: fulfil the budget sample provided in order to assess the creditworthiness. - The bank statements from the last 3 months, included the one for the potential wife or husband to estimate precisely and confidentially the budget. - Households official composition (by the Municipality) - Central national credit database own situation (provided for free at the National Bank). - Any other document like invoice, order note,... - In case amicable debt settlement plan, a copy of the plan is required. 8

9 Some elements about Crédal Treatment process of the application: First contact (by phone): to check the requirement conditions are fulfilled. If so, a postal mail is sent will explain how to complete and prepare the interview + link with downloadable documents. Interview (effective meeting): once the documents and budget is completed, contact Crédal to fix an appointment (in one of the local branches). The credit adviser will finalise the budget and complete the credit demand. Credit committee: Once finalised, the credit demand is presented to the Committee to decide. If positive decision, another appointment is fixed to sign the contract; If negative, a letter will be sent to explain the reasons. The process all together takes around 4 weeks. 9

10 Credits with impact on mobility Impact on mobility and employability Purpose Number Average amount Average monthly instalment Car (new/second hand) Motorbike-scooter Tax related Insurances Car repairs Driving licence Training/study Computer

11 Credits with impact on housing (access / quality / basic comfort) Purpose Number Average amount Average monthly instalment Security deposit Heating Thermal insulation Other works Furnitures Electric goods

12 Credits with impact others various purposes Purpose Number Average amount Average monthly instalment Health Family regroup (when parents/children are abroad) Others non specified

13 Credits with impact on various purposes Purpose Number Average amount Average monthly instalment Health Family regroup (when parents/children are abroad) Others non specified

14 Credits with impact debt or credit consolidation Purpose Number Average amount Average monthly instalment Debt consolidation Credits consolidation

15 Credits with impact debt or credit consolidation Purpose Number Average amount Average monthly instalment Debt consolidation Credits consolidation

16 Credits' impact on public authority expenditures In December 2005, 48 credits where used to buy or repair a car Thanks to these credits: - 18 households had the opportunity to maintain their jobs - 5 unemployed persons got a job - 6 signed a temporary job contract Total: 29 households had the opportunity to access or maintain their jobs. The Plan Federal Bureau estimates the annual cost, for the Public authorities, of an unemployed person at around If we consider (realistic hypothesis) that 29 beneficiaries have avoided needing 6 months of unemployment benefits, the public authorities savings are: 29 people X ( / 2) =