Microcredit has proven an important economic instrument, first of all in developing countries and later also in industrialized ones, thanks to its ability to represent a relevant alternative to the growing demand for credit, both towards social and production ends.

The recent spread of regional programs of microcredit in Italy, aimed at financial and social involvement of less fortunate social categories, proves there is trust at an institutional level in the efficacy of microcredit as a measure against poverty and as an innovative welfare tool.

At the same time, microcredit offers also an interesting loan strategy. The integrated offer of assistance and monitoring services (Business Development Services, BDS), that are at the borrowers’ disposal for the whole length of the loan, allow the setting up and the survival of small entrepreneurial ventures, considered to be at risk of marginalization according to the production market principles.

The regulation

The Italian regulation of microcredit (stated in articles 111 and 113 of the “Testo Unico Bancario” – TUB – and in Decree 176 of 17th October 2014 of the Ministry of Economy and Finances) shows to recognize the complexity of such a tool and the necessity of preserving its efficacy by valorising its distinct attributes.

An internal distinction in the definition of microcredit arises, through the separation of social and entrepreneurial microcredit.

Entrepreneurial microcredit

The term entrepreneurial microcredit refers to products and services useful for developing people’s resources by promoting the right to business venture.

The goal is to create a virtuous mechanism that allows micro-entrepreneurs to generate revenues and employment in order to become economically independent.

According to this regulation, the main characteristics of this type of microcredit are:

  • Maximum amount: 25.000€ (in certain cases it can be increased to 35.000)
  • Maximum duration: 7 years (with the possibility to extend it, in some cases, up to 10 years)
  • Reimbursement procedure: installments of up to a three-month frequency
  • Guarantees: no request for real guarantees and possibility to access freely to public security of the PMI (small and medium enterprises) fund

Social microcredit

The expression social microcredit refers to a group of products and services useful for fighting poverty and social marginalization. It refers to a procedure that offers concrete help to people and families in economic difficulty, through granting a small loan; on the other hand, it spreads the culture of responsibility, transitioning from a grant component logic to that of a loan. The features of a social microcredit are:

  • Maximum amount: 10.000€,
  • Maximum duration: 5 years,
  • Real guarantees: none.

In addition to granting the financing, the microcredit activity implies the supply, from specialized operators, of the auxiliary services of assistance and monitoring of borrowers. (Art. 3 Decree 176 of 17th October 2014 of the Ministry of Economy and Finances).

Follow-up material

Italian Microcredit legislation

Central Guarantee Fund

Guidelines for auxiliary and Microcredit-monitoring services