Good Practice Method
The Eastern Cantabria FLAG has partnered with a local microcredit institution in assessing business plans to help community members obtain loans to launch new companies in its area.
In order to extend its scope to support local development in its area, the Eastern Cantabria FLAG has developed a close collaboration with MicroBank, a social branch of the Caixabank, to help project promoters that do not have the standard profile that most banks demand in order to provide a loan.
Indeed, difficulties in accessing finance has been singled out by many as one of the key barriers to business creation, an important objective within the FLAG’s strategy to boost sustainable economic development. Through this partnership, the FLAG can help community members secure the private match funding needed to complement the FLAG grant as well as helping those whose projects do not receive a FLAG grant.
This collaboration with MicroBank is formalized with a contract between the two organisations, whereby the FLAG:
Thanks to this guidance, the FLAG can support project promoters to deliver quality business plans. Moreover, a favourable report from the FLAG serves as a certification that the beneficiary is a suitable candidate for a MicroBank loan without need of bank guarantee. In this way, the FLAG is able to reach community members which would otherwise struggle to put their ideas into practice.
Since the collaboration started, the FLAG has worked with five different projects to launch new economic activities: an interactive museum with activities for children; a fast food restaurant with Turkish and Indian dishes, opened by a Pakistani immigrant; an agroforest and gardening business; a haberdashery store; and a mobile auto repair shop. All five projects had their business plans validated, obtained a loan from MicroBank and are now operational.
Where FLAGs are recognised and trusted partners in a local community, they can play an effective role in supporting community members to access the private finance to launch new activities. Indeed, this practice has already been transferred to a Galician FLAG, which has also entered into a partnership with the local branch of MicroBank. It is likely to be transferable to any FLAG area where there is local demand for private finance and where the FLAG staff has the knowledge and capacity to provide business advice and assessment.
One to one business assessment can be rewarding and is often the only way to help certain community members put their business ideas into practice. However, such assessment work can be time consuming and therefore reduces the amount of time available for other FLAG activities, including animation. It therefore requires a great deal of flexibility from the staff involved – as well as judgement in terms of balancing priorities.
Qualified staff with experience in assessing business projects, including their economic viability and marketing plans.
In this case, the FLAG Manager has devoted approximately 5-7 hours/week to this sort of work which of course depends on the volume of project proposals received
|Timeframe of implementation||From Jun 2017|
|Type of area|