What is the profile required to obtain a microcredit in Ecuador?

Valentina González went through three cooperatives to look for a microcredit of $17,000 and in all of them he did not meet the requirement of having contributed at least one year to the Ecuadorian Institute of Social Security (IESS).

The corporate communicator of a private company needed that money to cover the debts it maintains and even start the purchase of a vehicle. “Now I have to be patient and control my expenses. On the one hand, she also did it to not be so tight, ”says González, who aspires to achieve that stability in contributions that banking institutions require.

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A different case is that of landy andrade, owner of her business Bolos Gourmet Saga. She has been with the venture for two years and has knocked on the doors of almost all banking institutions. She is looking for a microcredit of $3,000 or $5,000 to buy an industrial machine that facilitates their work.

“I have tried all the banks. They don’t even give you the opportunity because they ask for extensive requirements, for example, if you are married, they ask that your husband also have a good credit history. It’s like the credit was also for him and it doesn’t seem to me because I do the credit,” says Andrade, who has had a good credit history for some time, but reproaches that this is not enough for banking institutions.

Both González and Andrade were looking for a microcredit, a type of loan that is generally more intended for entrepreneurs and small businessmen for the growth of their businesses. Microcredits are in the second segment with the highest number of grants at the national level in cooperativesafter consumption, with $3,979.52 million from January to November 2022according to figures from the Association of Private Banks of Ecuador (Asobanca).

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July was the month where the most was allocated with $419.03 million, followed by August with $398.34 million and September with $397.87 million. The cooperative that granted the most, according to Asobanca data, is Alianza del Valle with $598.73 million; Cooprogreso with $345.62 million and the Fernando Daquilema Savings and Credit Cooperative with $209.69 million.

As for the banks, it is different. Here $2,261.91 million in microcredits were allocated from January to November 2022, becoming the third segment, after commercial and consumption. In October, more capital was granted with $229.92 million and it is Banco Pichincha, who leads with more than 50%. This entity provided $1,322.77 million in microcredits, followed by Banco Solidario with $330.10 million and Banco Guayaquil with $250.19 million.

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The main occupation of those who seek to access a microcredit, according to banks and cooperatives, is that of an entrepreneur or having a small business. They require it precisely to finance a business.

For example, at Banco ProCredit, they mention that this credit is granted to a natural or legal person, or to a group of borrowers, to finance production, marketing or service activities, whose main source of payment is the product of sales and income. generated by such activities.

“In addition, that due to the size of the economic activity, it is classified in the microenterprise index,” says María Soledad Castañeda, Manager of Business Banking at Banco ProCreditwho also details the profile to access this credit:

• Natural persons, legal entities and family units with mixed income from the microenterprise segment, belonging to the commerce, services, production and agricultural sectors with annual sales of less than $100,000.
• Have at least one year of operation of the microenterprise.

In the CREA Savings and Credit Cooperative, the main characteristic is to be an entrepreneurhe says general manager Patricio Barzallo. “Microcredit is intended for entrepreneurship and small companies in formation. It is a financing modality to provide capital to productive projects”, he indicates and adds that this segment represents 43.90% in the cooperative.

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Barzallo explains that the applicant’s profile is analyzed and the entity collects the information. For example: if it is about livestock, representatives of the cooperative go to the site to see the land or if it is a store, see products in stock and the profitability to pay the debt.

“There is no standard… a taxi driver can be too. What you see is the income that the person has, minus the expenses, which the project generally consumes, then we get that result and we see how much the fee can be paid,” says Barzallo.

In this cooperative a guarantor is necessary and a interest rate of 16% to 17%, with an amount ranging from $1,000 to $200,000 with a maximum term of nine years. “It is an expensive loan because of the risk it entails,” says Barzallo, who refers to the data from the Global Entrepreneurship Monitor Ecuador that a venture generally does not exceed the 42-month threshold.

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CREA has a presence in the provinces of Azuay, Cañar, Pastaza, Morona Santiago, Chimborazo, Tungurahua, Pichincha and recently entered the city of Guayaquil. They have a low risk indicator of 1.90%.

Meanwhile, in the cooperative Cacpey Yantzaza They have similar handling. They also visit the entrepreneur, whether he has a store, pharmacy or even a cart business, says his manager, Gonzalo Morocho.

“The advisors do a survey of information, a budget of income and expenses,” says Morocho, who points out that the amounts range from $100 to $100,000 with an interest rate of 14.5% to 17%. The term is from six months to eight years.

Access to this microcredit in Cacpey is also for those who reside abroad. “We have some partners who are migrants and they stop doing things through powers of attorney and pay with transfers abroad,” he points out.

In Cacpey, 42% are microcredits and 58% for consumption and it works in Zamora, Loja and Quito in person, but access is nationwide, according to Morocho.

“Microcredit has been increasing at a fairly fast percentage, sometimes people prefer consumption because of the interest rate, however, entrepreneurs apply to microcredit for the facilities. We have a projection of growth”, points out Morocho. (YO)