A microcredit is a loan of an amount not exceeding one million rubles taken out by a natural person, an individual entrepreneur or a legal person under a loan agreement with an OPM, a credit union (a credit union) or another organization authorized to issue microcredits. The loan is gradually repaid in euros by the borrowers on a bank account opened by the company ABC Microfinance in monthly tranches whose amounts are calculated by showering the amount of the loan granted by the lender by the number of months of the duration of the project supported. as indicated on the recipient`s project page. These monthly amounts are rounded and adjusted to match the amount lent on the date of the term of the loan agreement. This credit agreement will enter into force definitively from the later date of these maturities: the amount of the loan will be transferred by bank transfer to the borrower, to the IFM via the De Babyloan website on an account opened by ABC Microfinance. That transfer shall take place at a time when the amount necessary for the beneficiary`s refinancing has been recovered online or at the end of the period during which the beneficiary project may remain online. This loan agreement from JSC Microfinance Organization Crystal, Georgia, shows how important it is to use simple, easy-to-understand language. In accordance with Smart Campaign`s Customer Protection Principle 2, financial institutions must transparently and adequately disclose the prices, terms and conditions of financial products. Transparency implies clear communication with customers at each point of service. This is an explicit agreement between the parties that the loan has no interest to pay for the lender`s profits. This loan is used for refinancing, as attested by the borrower: the purpose of this contract is to allow the micro-entrepreneur, within the meaning of Article 2 of the loan agreement who carries out his activity in the country, to grant microcredit in order to allow his social and economic development. The integration of an MFO into a self-regulatory organisation (the register of SRO active in the microfinance market is available on the Bank of Russia website) and cooperation with the institution of the Financial Ombudsman can be an additional guarantee for the respect of clients` rights.

In this context, conclude a loan agreement or have concluded a loan agreement with the beneficiary, similar to the duration and amount of that loan agreement, and remind the beneficiary that he is obliged to use the borrowed money to finance the project referred to in Article 2, to the exclusion of any other use. This toolJSC Microfinance Organization Crystal, Georgia, shared its simple language credit agreement with The Smart Campaign. This contract is used with customers looking for credit for small businesses. The contract is concise, written in plain language and uses very little jargon. It describes the credit conditions, fees and penalties and, in particular, the rights and obligations of both parties. Clause 5.10, “The lender assumes responsibility for providing the borrower with complete and clear information about the loan. including all possible taxes and modifications… ” is particularly important for transparency. The contract contains an amortization plan that separates the principal, interest and costs and defines the amount, number and due date of the instalment payments. Finally, the contract stipulates that the customer receives a copy of the signed document, an important factor in ensuring transparency with the customer. The Smart Campaign encourages institutions to download and verify this document and use it as an example of “good practice” for creating or improving their own credit agreements. .

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