The start-up

Despite the entire dome and gloom and the unemployment numbers which are unnerving, some French people remain hopeful. Their job, they have lost that, for many a long time ago, but from now on a new adventure is starting: they are going to become their own boss thanks to micro-credit. For twenty years now, ADIE, the Association for the right to Economic Initiative has lent small amounts to those who do not have the right to credit from the traditional banking systems. Reporting by Cecile Mathy in Valence in the Drome.

They are of various ages, but most are men who commit themselves to a new professional life. They dream of being their own boss, of becoming a shop keeper or a tradesman, in fact, of creating their own job, but sometimes the projects can be one of a kind. For example Patrick is an inventor. His latest creation: a gadget for fixing the wheels onto skate boards.

“I have hope, I have a dream, I can succeed, and I need a good few thousand Euros to start a world project which addresses the second pastime in the world of adolescents, that’s impressive. I have some really beautiful things to do and I would like them to help me to be able to at least finance it, to be able to make them and I have learned not to count on anyone, but then unfortunately I need however a little jump start and I hope that ADIE will understand”.

Patrick stopped working. For six years he was dedicated to this project only living on social security, notably welfare, for him then, the only option is micro-credit.

“A bank manager or someone like that, they are not the people who take risks, they do business on the backs of people without any risk. You want to borrow to buy a house, you have to provide assurance for three houses, personally I do not have anything to provide surety, I do not have any pay slips, I have nothing; it is just not possible to go to a bank at this time.”

Patrick would like to get a loan of 4500 Euros. For Camille Corfa the advisor from ADIE who has just arrived to visit him in this village in the Drome, it is necessary to make him aware that a loan cannot be taken on lightly.

“We are in agreement that we are sure of the stakes, that it can be a good deal and all will go very well, we can give you the opportunity to try and that it could very well not take off, that can happen. So I am not here to break your moral or anything, I’m here to make it happen so that… well on the other hand what I’m trying to tell you is that if, if it is passed by the committee for such a sum, that means that for two years you have to put aside 138 Euros [per month] come rain, snow, wind, whether you have sold anything or not…”

– I have learned to juggle my life almost from day to day, so…

– It is not from day to day, it’s a long term contract with a minimal maturity date which it must pass whether it is working or not, that is we are giving you the opportunity of trying and even if it does not make its numbers it is necessary with regards to your personal budget, that there will be the possibility of paying, else, if we were financing you in any other way, in fact, we could not do it. I am not here to play the devil’s advocate or anything but so that… doing what’s possible and the idea is to be able to support according to needs and we do that.

The average loan agreed by ADIE is about 2000 Euros. The association borrows money from normal banks at an interest rate of about 4 to 5 percent. It lends this money in turn to its customers at a rate of 9.71%. Most of the beneficiaries are unemployed; these people get by half thanks to welfare payments. So this is an audience which has left the system and the professional world. The advisors of ADIE must do their assessment with a lot of empathy.

“We try especially from the start to be able to listen a lot to the people who come to see us; they are often people who have had a lot of refusals and doors closed in their faces and so doing the text and explaining that when you ask for credit you have really got to take account of what that means in terms of commitment behind it, and right away we need to have skills, some technical and then a culture, a bit on the institutional side and a bit on making business, but above all perhaps are human qualities, listening and explaining which are necessary so that things go well and that we succeed in having a good meeting, putting together the case, making business which is reasonable.”

Another example is Sonia. She is a yoga teacher. Until now she has been providing training free of charge, but now she wants to set up on her own. To do that she dreams of 20000 Euros, but she has told herself to start at 5500 Euros. After several minutes of explanation, Camille tries to have her understand how the association works.

“Absolutely, for us, micro-credit, 5500 is our maximum and that never happens for a first load, do you see what I am telling you?”

– Yes, yes, I know because the banks, my bank manager he is ready to lend to me, it is me who did not want that, it is me who chose ADIE too, because really you help in a way that banks don’t help us.

– But the bank is not there for that. We do that, we have a banking service at ADIE. Simply, we are on the front-line where the bankers won’t go first of all because the risk is sufficiently high, but not just that, it is essentially because it brings in very little for them. Because lending small amounts at low rates, that does not bring them much, that costs them in terms of management. On the other hand if that does not give you a problem in the cost of management and you are prepared to pursue it, it is good business. There is not a history of scruples, so we are in the same business.

– Yes, all right, well…

– Because I will not be able to offer you the request for finance which you need, now, at the start, that is why I am telling that, if…

– But the starting point, if? The smallest amount you can, the smallest?

– Right away, a first request for 6000, that’s already extremely important, we would say no, no doubt. Do you see that I’m saying? Because it is not just me who decides. We have a credit committee which rules on risk, on your personal budget and on a group of things which means that, they only go on important requests when they have a very clear view of everything. All right? It is something that is hard to get even for normal work.

Camille’s days are busy; right now the requests for credit are growing.

“We have a level of work at the moment which is quite high, from the point of view of the coming together of economic factors which are a bit delicate. It is not so much that people have trouble finding credit traditionally in their banks, it is rather that there are quite a lot of people finding themselves unemployed who can no longer get back into normal salaried work and have just, well, told themselves: why not make your own work by putting yourself on the front-line; often that they already know and so they say to themselves: perhaps it is the time, now, the work place is blocked, you see, if I want to be able to succeed perhaps that’s it, I’ve got to go that way and so the partner for the moment, well it is going to be ADIE.”

ADIE celebrated its 20th birthday in 2008. The association was create by Marie Nowak. She was inspired by the Grameen Bank established by Muhammad Yunus, the Nobel Prize of 2006. In France, the work of micro-credit is still relatively unknown even though more than 50,000 tiny businesses have been financed in two decades and 62,000 jobs created. Clotilde is a part of the new comers to the world of the self-employed. She announced her service as a freelance marketing consultant in January.

“It was not a project which I had for a long time, but it came naturally following the last job that I held and which did not fit at all, like previous jobs, with what I wanted to do. I needed this loan to be able to get started in fact, to have something in my reserves. So ADIE at least is aware and so recognises well in fact the problem of getting started for business starters. We have not of course won the lottery or even have had a big redundancy payment in order to get started, so knowing that you must at least not go into the red right from the start and put down the target for the first 18 months, well in fact that was very suitable all right.”

– And does it scare you a bit to start off like that in this… well being self-employed?

– Personally I would say not, because I already had a customer, a good customer and a good portfolio of customers who were just waiting to give the money to me and not to one of my bosses for example. Well if I do not have the choice, if that does not work, I won’t worry, I will always find work but I’m not thinking about that, like when you are skiing you don’t think you are going to break a leg, right! It is true that if you start your work only thinking about the risks, only thinking about the negative, better not to start, I think.

For Clotilde the signals are green. But sometimes the adventure is short. For ADIE, it is important above all that the people have got themselves into a job again or got their foot back into the world of work.

“80% of people that we have financed leave this means of social help by the end of three years either because they have established their business – their business is running even if they are not making thousands or hundreds [of Euros], or because they have worked with a professional network, they have met the world which means that in the end they have perhaps the chance to cross over to a salary, sometimes it is welcome in terms of income. You have to keep in your head that we are sure of integration into the workplace and the economy, so right away with these 80% leaving this means of social help, we reckon that, well, we can always do better but what we hope for above all is integration into the world of work.”

For the moment, the Association for the Right to Economic Initiative benefits from a national subsidy and European help to operate, but it is hoping to double its volume of work between now and 2010 in order to be self sufficient. A bet there too, but the numbers support the argument: the number of loans agreed has increased by 30% since 2007.

$Id: 2009_04_act.htm 35 2021-02-12 12:17:35Z alistair $

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