The Luxembourg microcredit institution launches a capital raising initiative, via honorary loans, from economic, financial, and philanthropic actors. The reserve fund ranging between 150,000 and 250,000 euros will finance the activities of micro-enterprises and the self-employed at zero interest rates.
Photo: Rémy Jacob, microlux’ Chairman of the Board of Directors / Credits © microlux
Microlux, Luxembourg’s microcredit institution for the self-employed and small businesses, is calling for honorary loan funds from institutional, financial, and philanthropic players.
Created in 2016, the organization offers financing solutions to the self-employed and SMEs that have been unable to obtain loans from banks. It also offers individualised support, particularly in the areas of accounting, administration, etcetera. Further, it also offers individualized support for entrepreneurial creation or development projects.
An honor loan is generally interest-free and without any guarantees. Borrowers are accorded loans and are expected to honour the terms and reimburse the amount received.
Interest-free micro-enterprise loans
With this capital raising, Microlux intends to strengthen its equity capital and build up an additional financial reserve ranging between 150,000 euros and 250,000 euros.
In turn, the reserve would be used to finance entrepreneurial projects in the form of zero-interest honor loans.
These loans are intended to cover part of the necessary financing required by businessess. For example, a micro-entrepreneur needing 15,000 euros to start a business could receive 10,000 euros repayable under the usual conditions, and 5,000 euros at zero interest, payable over 24 months.
“Given the current uncertainties, even those who have ideas for good projects are reluctant to take the plunge. Microlux would like to help them, and consequently, help the Luxembourg economy by means of these honorary loans,” explains Rémy Jacob, Microlux’ president. “Together, we will better the odds for our fellow citizens most affected by inability to secure funds.”
This new type of financing will complement the other credit options already offered by the financial institution, such as its 4% interest loan, applicable on amounts up to 50,000 euros (under certain conditions).
Supporting professional development
Further, Microlux’s “Employment” microcredit loan – covering up to 10,000 euros – is aimed at professional mobility.
The scheme is intended to finance a driving license, a vehicle to get to work, vocational training, or a job-related move. The borrower also benefits from assistance with budget management.
Created in 2016, Microlux’s mission is the social and economic inclusion of people who do not have access to traditional bank credit. The non-profit association offers support and finance in the form of microcredits and project leaders wishing to create or develop a business. “The objective is to improve their professional development and their living conditions,” explains the financing organization.
Its shareholders are four of the founding members: BGL BNP Paribas, ADA (Appui au Développement Autonome), ADIE (Association pour le Droit à l’Initiative Economique) and the EIF (EuropeanInvestmentFund). The insurer Foyer joined the group in 2018.
In five years, Microlux has granted nearly 130 microcredits to a hundred or so companies, creating 150 jobs in the process.
The micro-entrepreneurs supported by Microlux are active in catering, accommodation, transportation of people and small packages, food, cleaning, and care and beauty products. Some of them also run start-ups.
Rémy Jacob, the current Chairman of the Board of Directors and also a member of the Board of Directors of the NGO ADA, previously worked at the European Investment Bank (EIB), and most notably participated in the launch of the European Bank for Reconstruction and Development (EBRD) in London in 1991.