Destination Education Comes to Curaçao

Qredits Microfinancing for SMEs in Curaçao

Local entrepreneurs starting a new venture agree that it can be quite a challenge to get adequate funding in Curaçao. Banks have procedures, standards and risk-aversion practices in place that often make it hard for a new entrepreneur with no collateral to get a loan. Qredits, a Dutch microlending institution is planning to start its operations in Curaçao in the first quarter of 2018. TEXT BY FARAH DIBAH AYOUBI

Why Microfinance? Curaçao has an extensive financial sector and entrepreneurs have access to crowd-funding options. So, one might ask why should I opt for microfinance? According to Elwin Groenevelt, CEO of Qredits, “Banks are no longer equipped to issue small loans, especially not for startups without collateral. The handling costs and risks are actually too high to provide small loans profitably. Banks tend to put more effort towards their most profitable clients. If you are a small entrepreneur with a small loan, it’s difficult to get attention. Yet, extra attention may just be what helps an entrepre neur become successful. Microfinancing often enables the entrepreneur to build relationships with the lender based on trust and can even provide help and guidance to the entrepreneur with access to knowledge and online learn ing, to help them overcome pitfalls. Qredits is not in direct competition with banks, as Groenevelt puts it, “Qredits is not a competitor to banks, just complementary to the sector.”

Social Lending The concept of social lending may not be totally new to Curaçao, since many retired people in the banking sector look back on similar practices that banks used in the past. As Groenevelt notes, “We have a different approach to lending. We take things into account such as: How many jobs will we cre ate? So far more than 15,000 jobs have been created in the Netherlands by companies using our micro-financing option.”

Loans with Business Development Microfinance is not only about providing loans. It is very important to the entrepreneur to be able to access the business develop ment services he/she needs to be able to build a sound business plan and repay the loan. Groenevelt says, “We believe one-on-one mentoring or coaching is very important. It works, because our figures show that after 3 years, 93% of customers are still active and the default rate is a low 4-5%.” Qredits is a private, non-profit, microfinance, social lending insti tution, which strives to help entrepreneurs who don’t qualify for commercial bank loans. They have issued more than 11,000 loans, using EU guarantees, among others, to minimize its risk. Their front offices in Aruba, St Maarten and Bonaire, all use the Qredits back office in The Netherlands. They plan to start opera tions on Curaçao in March 2018 with loans up to ANG 50,000 for starting and existing entrepreneurs. At 9.75% interest rate, the loans provide a non-profit business viability for Qredits, which states that research in Holland has shown that to offer these loans at breakeven for a bank, it would have to charge 18% interest.

Microfinance is not only about providing loans. It is very important to the entrepreneur to get the business development services he/she needs to be able to build a sound business plan.