Micro loans are hit in Serbia - Classic bank loans unavailable to the unemployed in most of the cases

(Photo: love work 51/shutterstock.com)

Classic bank loans in most of the cases are unavailable to the unemployed and micro funding institutions which find their clients in villages fulfill the hole.

Zoran and Ljiljana from Velika Krsna took RSD 250.000 on two-years and bought a cow.

- We would start production and took up to five cows and that would pay off in two years. It would cover costs and there is milk which would cover everything else - Zoran and Ljiljana from Velika Krsna say.

Experience of Snezana Kuzmanovic from Mihajlovac is similar. If it were not for a fund deposit, she would not have opted for a loan with which she bought two cows. She is paying it off from profits from milk, chese, etc.

- They did everything in a week so I accepted that instantly, took the money and bought what I needed- Snezana Kuzmanovic from Mihajlovac says.

If a client does not want to go to a bank, a banker will come to a client. However, since it is social entrepreneurship, not classical commercial banking, then rules of game are quite diferent.

-We take all the loan risk. A client gets funds after from a bank and he or she is obliged to pay monthly installments - Milomir Dadic from Agroinvest fund says.

The average amount of micro loan is 100.000 to 500.000 dinars. Capital is provided through donations of humanitarian organizations but business bank is essential for their approval.

- In Serbia, there is really a big interest in micro crediting especially in rural areas. We do not do it in Serbia directly and they are more expensive than they should be. This is because banks in that process almost do not do anything and they do not take risk. They take profit from our clients since there is no law which would split social from classical loans as it is the case in the whole world - Karolina Cilikunas, Regional Manager at World Vision says.

The reason why banks are not willing to approve loans to unregistered households or unemployed is insecurity of payment collection, risk, weather disasters.

The only think which a precise banking computer cannot control is a field completed by social entrepreneurship.