The loan fund, as the name suggests, is a non-bank institution that focuses its activities on providing access to external sources of financing through granting loans. By entering into an agreement with the borrower, the Fund undertakes to transfer a specific amount of money to it, thus becoming the lender.
Specified amount in the contract
The borrower also undertakes to return a specified amount in the contract in the completed completed. At the same time, the borrower is obliged in exchange for granting the loan a payment to the interest fund, which takes nothing other than an interest rate. As a result, the fund gains funds for conducting business activities, for the borrower, for undertaking economic activities.
The target customers of the Group for the loan fund are micro and small enterprises but also unemployed persons starting a business. The effect of their activity is to improve the financial liquidity of enterprises, which favors the creation of new jobs. Among loan funds we can distinguish.
Companies of various legal forms
Funds are usually run by various types of Associations and foundations, but also by companies of various legal forms. We also separate micro-loan funds from loan funds, which are characterized by a simplified loan granting procedure. They are based on a thorough analysis of the borrower’s credibility and reliability.
In practice, it’s usually a conversation with an advisor. The value of the first loan is small compared to each one granted next to the increase of the borrower’s credibility. Clients who take advantage of the offer of micro-loan funds are usually people in financial difficulties or micro-enterprises that have difficulty obtaining a loan.
Loan funds owe their existence to loan capital
Loan funds owe their existence to loan capital. The effective support of financial liquidity of micro, small and medium enterprises depends on the amount of loan capital that is available to loan funds. The comforting news is that the capital in loan funds is constantly increasing.