In the context of the institution of microfinance that also started in the Greek market, the first loan was given on Tuesday, in a live broadcast from the event hall of the TMEDE in the modern smart and energy autonomous building in the center of Athens.

According to APE – MPE, it took a few minutes of time, a few clicks on the computer screen in order to upload the required documents and identify the prospective borrower in order to see the amount of the loan credited to his bank account. All this from a distance without the need for his physical presence or live communication with a competent employee.

The loan was given by the new microfinance institution, TMEDE Microfinance Solutions, which is also the first institutional body of this category in Greece, licensed by the Bank of Greece.

TMEDE Microfinance Solutions offers integrated digital microfinance services, in collaboration with TMEDE throughout the Greek territory, providing working capital and investment purpose microfinancing, up to 25,000 euros for working capital loans and/or investment purpose loans, with zero loan costs. The cooperating bank is Attica Bank, while for the first phase of its operation, the customer base of TMEDE Microfinance Solutions includes only registered members of TMEDE, while in the following years the institution intends to expand its clients to other sectors as well. TMEDE Microfinance Solutions will be able to participate in European investment programs, guarantee programs of the Development Bank or other co-financed programs.

As the president of TMEDE pointed out, Konstantinos Makedos the launch of TMEDE Microfinance Solutions marks the active response of TMEDE to the requirement to synchronize with the dynamics of changes and needs of the technical world. In today’s competitive environment, small and medium enterprises, mostly companies in the technical world, cannot survive without a normal flow of financing. Attempting, every time, to foresee and face the new challenges generated by the rapid economic, social, environmental and technological developments, as TMEDE Group we proceed with strategic choices that expand our business portfolio, said Mr. Makedos

What is microfinance and who is it for?

Microfinance, as mentioned by Governor of the Bank of Greece Giannis Stournaras, making a historical review of the institution internationally, today includes a set of financial products aimed at low-income individuals and very small legal entities, which are usually excluded from the banking sector, mainly due to their inability to provide collateral to guarantee the loans they they receive. Among the various financial products included in microfinance (microinsurance, savings, money transfer), the best known is microcredit in the broad sense of microfinance. Microfinance can be a valuable tool when used appropriately to create or develop businesses and improve the living conditions of households. Microfinance is a powerful weapon in the fight against poverty, having a positive impact on borrowers as their income level increases after receiving the loan.

In Europe, the promotion of the institution of microfinance is more part of political initiatives to combat social exclusion and create opportunities to return to employment. In an indirect way, microfinance is presented as a lever to combat poverty, offering those who benefit from it the opportunity to escape social exclusion through the creation or undertaking of a business.

The majority of microfinance providers, according to data from the Bank of Greece, are non-banking microfinance institutions (94%), which operate as NGOs, non-banking financial institutions (NBFIs), government agencies and cooperatives.

The growing demand for new alternative forms of financing, as also reflected at the European level, created the need for an institutional framework in Greece for two reasons: the facilitation of very small businesses’ access to financing and the strengthening of social groups to deal with unemployment and social exclusion.

What does the legislative framework provide for?

Law 4701 of 2020, in the spirit of the European Code of Good Practice for the granting of microcredit, laid the foundations for the development of the sector. It was established primarily to cover the financial gap that exists in business activity and mainly affects those who are at the beginning of their business activity, because one of the main problems faced by very small businesses is their access to bank loans, especially due to the inability to provide the collateral required by EU banking legislation. Also, during the enactment of the law, the importance of the ability of microfinance institutions to provide business training advisory services to microfinance beneficiaries was recognized. Thus, and in this spirit, the law established this possibility as mandatory.

The law, as mentioned by the Governor of the Bank of Greece, for microfinance institutions aims to form a new pillar, parallel to the banking system, for raising funds from natural and legal persons who develop or have the possibility to develop a business / professional activity. This new pillar works in a complementary way and not in competition with the banks

A microfinance institution means a legal entity based in Greece that grants microfinance, i.e. loans up to an amount of 25,000 euros.

With regard to the activities of microfinance institutions, they can provide indicative microfinance up to 25,000 as follows:

– all forms of credit, either to cover investment needs or as working capital,

– leasing products for the acquisition of equipment,

– independent guarantees, which may not be used to obtain loans from other financial institutions,

Beneficiaries of these types of credits

Very small entities, natural persons for the purpose of setting up very small entities, natural persons exercising individual business activity and Social and Solidarity Economy Bodies.

In addition to the aforementioned credits, microfinance institutions can grant forms of credit aimed at strengthening public policies or the social and financial integration of vulnerable social groups, up to 25,000 euros.

These credits relate, in particular, to dealing with unemployment. Beneficiaries of this fourth form of credit are natural persons belonging to vulnerable social groups, as well as natural persons seeking to cover expenses related to their education.

Also, microfinance institutions must provide business training and mentoring advisory services to beneficiaries.

Regarding the conditions for granting micro-financing, micro-financing does not require the beneficiary to provide real security, but some guarantees may be requested.

The loan repayment period cannot be less than twelve months nor exceed ten years, while the beneficiary has the right to early repayment.

For the protection of the beneficiary, the law imposes transparency in the terms of lending by the mandatory mention of them in the contract between the beneficiary and the institution and also imposes the exact identification of the standardized information for the advertising and commercial promotion of the products of these institutions.

The law provides for the participation of these institutions in programs financed by the Public Investment Program, provided that they have previously received certification of their compliance with the European Code of Good Practice for the Granting of Microcredits.

The Bank of Greece has been designated as the competent authority, charged with the licensing and supervision of microfinance institutions.

Since the entry into force of the law until today, three microfinance institutions have received an operating license from the Bank of Greece: “T.M.E.D.E. Microfinance Solutions” “Microsmart” and “AFI Microfinance SA” which were licensed in January 2022, March and May 2023 respectively and are expected to start operating in the immediate future.

Since 2014, APHI and since 2018, Microsmart (as Microstar) have been active as urban non-profit companies in the field of microfinance, mediating with specific banks for the disbursement of microloans from them to clients, which the companies themselves had approached and initially evaluated.