Fundusz Mikro, established in 1994 under the auspices of the Polish-American Enterprise Fund, is a specialist financial institution for Polish microbusinesses. In 1996/97 Fundusz Mikro had its second full year of lending operations. During that time it extended over 5500 loans, through 15 outlets located in Polandís largest cities. As of January 1, 1998 we have 23 outlets and have made about 10000 loans. The repayment rate on the loans made so far has been over 98% and 27% of them have been extended to repeat clients, some of whom have even taken their sixth loan.

Fundusz Mikroís clients, generally employing fewer than 5 people, include carpenters, hairdressers, stonemasons, metal workers, car repair mechanics, computer consultants, taxi drivers and stall / shop keepers. On average they borrow 5500 z³ ($ 1,500) for 8.5 months for either working capital or investment purposes. This sum will typically increase their total stock or fixed assets by 50% and their net profits by 30%.

Traditional banks are not willing to serve these clients despite their having viable businesses. This is both because micro clients do not meet their collateral and track record requirements and because the loan sizes are too small to be profitable to them. Fundusz Mikroís approach is therefore radically different: it has streamlined procedures to ensure clients receive their loans within 10 days of submitting their application; it does not accept any physical collateral but rather the mutual guarantees of groups of 4-5 borrowers, each with their own business but strongly linked by family, work or neighbourhood ties; and it grants immediate repeat loans on increasingly attractive terms to íprovení borrowers. In this way Fundusz Mikro can substantially reduce its transaction costs and minimize its default risk whilst giving its clients the precise service and product they really need, that is: fast, simple and permanent access to credit, reasonable interest rates and knowledgeable, sympathetic and flexible loan officers.

Fundusz Mikroís results to date appear to demonstrate that both client demand and credit risk control are strong enough to create the scale of organisation necessary to cover its operating overheads in the medium term future and become a fully self-financing institution.

    Fundusz Mikro,
    ul. Zurawia 22,
    00-515 Warszawa,
    Poland Tel: (48) 22 6290092
    Fax: (48) 22 6288811

Hari Srinivas -
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