Overtime: how can the size of micro-loans for businesses increase
A bill on additional regulation of microfinance organizations (MFOs) has been submitted to the State Duma. The amendments provide for an increase in the maximum credit limit for companies and sole proprietors from 5 million to 15 million rubles. According to experts, the current size limit does not cover even the basic needs of entrepreneurs, and businesses need more access to loans. Details can be found in the Izvestia article.
Should MFIs be allowed to raise limits
Anatoly Aksakov, Chairman of the State Duma Committee on the Financial market (United Russia), is confident that government support in the form of interest rate subsidies or loan guarantees, as well as raising the limit, will improve access to financing for small companies.
The bill proposes to prohibit microfinance organizations from changing the terms of a consumer loan with a full cost above 100% per annum until the borrower repays a similar previous loan from any credit institution or MFI. It is also planned to prohibit the inclusion of overdue interest and fines in the principal debt.
According to the Central Bank, cited by Aksakov, the overdue debt of SMEs on loans is now at a historic low of 4.4%. Last year, the risk of floating rates for the microbusiness was limited, he recalled.
The variable interest rate on a business loan will not be able to grow by more than a third of the initial rate specified in the contract, and by no more than four percentage points. In addition, if the rate increases, the microenterprise will be able to ask the bank to extend the loan repayment period within three months.
According to Anatoly Aksakov, a bill is currently being prepared for the second reading in the State Duma, which provides for the indefinite right of borrowers — SMEs every five years to receive credit holidays for up to six months without deterioration of credit history. The grace period is granted at the request of the borrower without special requirements (reduction of revenue, activities in certain industries and others).
Elman Mehdiyev, Deputy Chairman of the Bank of Russia's Expert council on consumer protection of financial services, explained that SMEs have long outgrown loans of 5 million — this amount is not enough to purchase equipment for starting a business or materials for its continuation. That is why, he notes, it was initially proposed to remove any quantitative restriction and thus allow MFIs to lend not only to microbusiness, sole proprietors or the self-employed, but also to SMEs.
— Unfortunately, by leaving the possibility of providing loans on a professional basis (that is, repeatedly) to any legal entity and at the same time simplifying the registration of an individual as an individual entrepreneur, we leave the door open for "reverse leasing" operations, but under the guise of crediting individuals as sole proprietors, which is fraught with the seizure of movable and immovable property in an accelerated manner. On the other hand, professional creditors themselves need more effective protection at the state level from fraud on the part of entrepreneurs, who often hide elementary withdrawals of funds behind the bankruptcies of LLC companies," he believes.
The draft law has not yet been submitted to the Federal Antimonopoly Service of the Russian Federation for consideration. Izvestia sent a request to the Ministry of Finance, the Central Bank and the Ministry of Economic Development.
How should the maximum limit be determined?
Elman Mehdiyev believes that if MFOs do not have the capacity to issue large amounts, an increase in the limit will not affect the loan approval criteria in any way.
— And it is clear that in order to receive a larger amount, you need to meet more criteria and requirements, — says the expert. — Now the issue of the availability of funds for business rests on the amount of funds allocated by the state and the regions for concessional financing of SMEs.
The press service of SRO MiR notes that in the portfolio of MFIs, 60% of the total volume is accounted for by loans from legal entities and sole proprietors. At the same time, the average loan size in commercial MFIs varies from 1 million to 1.7 million rubles, depending on the legal status.
— Of course, the maximum limit should still be determined based on the external infrastructure of the market, taking into account the level of inflation, to which the business is also tied, — they say in the SRO MIR. — In addition, the business itself has repeatedly asked to increase these limits, so in this case it is the initiative of the companies themselves, looking for money for development.
In addition, in the context of the import substitution policy, it is necessary to create conditions for businesses (especially small ones) He could find sources of funding, the organization emphasizes.
Dmitry Abbakumov, coordinator of Delovaya Rossiya in the Central Federal District, points out that it is very important to take into account the difference between private microfinance organizations and state-owned companies.
— The interest rates in commercial MFIs are absolutely unrealistic in order to develop. It can be 50, 60, or 70% per annum. State—owned micro-credit companies, where the rates are lower, are a completely different matter. In fact, these are the mechanisms of state support for entrepreneurs, and here an increase in the limits suggests itself," the expert notes. — I support an increase in the bar from 5 million to 15 million rubles only for state-owned microcredit companies.
At the same time, as a source in the financial sector told Izvestia, there are MFIs that issue ordinary loans to individual entrepreneurs and legal entities in an even larger volume than they are offered in the State Duma, so there are no de facto restrictions anyway.
Are MFIs needed in Russia
Dmitry Lyubomudrov, a member of the Council on Financial, Industrial and Investment Policy of the Chamber of Commerce and Industry of the Russian Federation, believes that the State Duma is "not doing exactly what it needs to do."
— There should be no MFIs in the country at all, — the interlocutor of Izvestia notes. — We only need banks that are strictly controlled by the Central Bank. Moreover, restrictions on the maximum rate and maximum margin should also be introduced for them — say, 3%. Crediting citizens means creating conditions for social tension and impoverishment of the population. The population needs high salaries, not loans, even at the level of sole proprietors and small companies," concluded Lyubomudrov.
Vladimir Buev, head of the National Institute for System Research on Entrepreneurship, believes that no measures will save entrepreneurs from the risk of fraudulent lending activities.
— After all, business is a risk. And both from the lender's side and from the borrower's side. After all, both MFIs and businesses operate at their own risk," the expert notes.
At the same time, Buev believes that it is not the business of the state to limit and protect small and medium-sized businesses from debt addiction. Its main function in this case is to regulate regulations and prevent the bankruptcy of commercial banks that hold citizens' funds.
Oleg Nikolaev, an economist and member of the General Council of Delovaya Rossiya, notes that banks in Russia are very reluctant to lend to small businesses. After all, everyone needs collateral, and a novice entrepreneur usually has nothing to mortgage, the expert notes. Therefore, the state microfinance program, launched in 2018, has become an affordable alternative for them. And now the issue is related only to the fact that since the start of the program, inflation has significantly devalued the initial limit.
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