EUKN - European Urban Knowledge Network - BIC Lazio honour loans - micro credit in the Lazio region

BIC Lazio honour loans - micro credit in the Lazio region - Italy

Introduction

Business Innovation Centre Lazio (BIC Lazio) is a regional development agency that helps companies to start up and grow and assists local authorities in drawing up economic development plans. It runs a very successful project that finances small business start ups of unemployed people with so called ‘honour loans’. With a relatively small budget, over 1,600 jobs have been created in the region. It is an effective tool for channelling the creativity and the energy of unemployed young people into entrepreneurial activity.

Problem

Unemployed, inexperienced young people with entrepreneurial ambitions can have difficulties finding financers for there business start up plans. BIC Lazio helps them by providing both capital and expertise.

Description

The honour loan scheme, run by the Lazio regional government since 2001, encourages young people to start up their own business, by providing unsecured finance. With an ‘honour loan’, young unemployed people can turn their business plan into reality. They can apply for a loan up to 30.000 euros. Up to half the sum is provided as a grant, while the other half is to be repaid at an interest rate of 2.5 per cent a year. If the project requires more than this amount, the applicant must indicate where the rest of the financing will come from.

Approach

The first step in the process to receive an honour loan is to prepare a business plan and fill in the necessary application forms. The application pack supplied by BIC Lazio includes help booklets. BIC Lazio provides support through its regional network of business support centres.

Not every person, and not every business plan is eligible for funding. Some restrictions apply:

Only independent enterprises owned by an individual (one-person businesses) are eligible for the honour loan. The loan may be used to start up a new business, but also to take over of an existing business.
The applicant must be resident in the Lazio region, between 18 and 35 years old, and unemployed.
Funding to businesses or franchising outlets is only allowed to the following categories of economic activity: production of goods, commerce and service industry.
Freelance registered professionals are excluded.
Businesses in the so-called EU sensitive industries (agriculture, farming, fishing, fish farming, transport)are also excluded.
Businesses must be based in the Lazio region.

Results

The project has proven to be very successful. Its results can be summarised as follows:

In five and a half years of activity it has supported the creation of 1,288 self-employment initiatives in the region, which, out of 2,353 applications received, is a 55 per cent success rate. The 27 million euros that have been disbursed by BIC Lazio has led to the creation of 1,600 jobs – a significant result for a programme of such modest dimensions.
Two-thirds of clients are aged between 25 and 35. A slight majority are male. Recently, the number of female applicants has been rising, however.
The different kinds of businesses that have been set up are fairly evenly distributed across the economy, with 41 per cent in services, 32 per cent in commerce, 16 per cent in production and handicrafts, and 10 per cent in catering.

EU involvement

The initiative was co-financed under Objective 3 of the European Social Fund.

Contact info

BIC Lazio
Guendalina Pecile, tel. +39 06 9784 501

Project start date

01/01/2001

Links

Visit the BIC Lazio website

Document type

case

Themes

Urban Policy > Economy knowledge & employment > Urban economy

Keywords

Business support