Investments in microfinance organizations: how much can you earn and how reliable are these investments?

Investments in microfinance organizations in Russia are often considered as an alternative to classic bank deposits. They allow you to receive passive income and increase your capital. They attract investors due to increased interest rates.

There is no need to rush and invest your money right away. First, you need to figure out which microfinance organizations are best to invest in, what investment methods exist, and what nuances the investor will have to face.

What is investment in IFC?

All MFOs operating on the Russian market are divided into two categories. The first - the most numerous - unites microcredit companies or MCCs. These are relatively new and small market participants who do not have the right to attract funds from individuals who are not founders.

Microfinance companies or IFCs do not have such restrictions. Therefore, when talking about investments in MFOs from individuals, we are talking exclusively about them. Organizations have the right to invest in both IFCs and MFOs.

The number of active IFCs as of April 10, 2020 is very small - only 35 organizations. You can find a comprehensive list of them on the website of the Central Bank of the Russian Federation. The information is available as an Excel file.

Investment in MFC means investment of funds at interest under a loan agreement with a microfinance company. Several details are mandatory terms of the agreement:

• the amount invested by the client;
• term of investment;
• the interest rate at which income is calculated;
• ways to earn interest on invested funds.

An alternative option for investing in an MFO business is to purchase bonds issued by a microfinance organization. This type of borrowing is also available only to IFCs,

What to look for when choosing a multifunctional complex?

Many are accustomed to the fact that MFOs are lenders whose main task is to “launder” money and receive excess profits at the expense of those in need. Perhaps this was true 10 years ago. But today, most self-respecting microfinance organizations value their reputation, do not try to look for one-time income, but prefer to work for the future. Evidence of this is the gradual reduction in loan rates and the receipt of licenses to conduct official activities.

When choosing among available organizations, it is worth considering such factors

:

• verified licensed companies are included in the register of the Central Bank;
• A company is considered verified if it has been operating for more than 2 years;
• complete information about the organization, owner and its founders is freely available;
• the company operates publicly, so you can find information about investments and statistics on loans issued;
• reviews are one of the main tools of influence; if a company does not remove negative reviews, while most of them are positive, this indicates customer trust.

Therefore, if you see an advertisement for a new organization about which there is no information, then you should check the reviews, and if there are none, refuse to cooperate with it

.

Is it worth investing in microfinance organizations?

The decision to invest in MFOs should be made with a clear understanding of the investor’s main rule: the higher the profitability, the higher the risks. In other words, cooperating with microfinance companies is very profitable, but at the same time dangerous.

Standard recommendations from professionals on choosing an investment option are as follows:

• diversification of investments. It means the advisability of simultaneous use of several methods of increasing savings;
• a thorough study of the history and current state of the microfinance company. A significant part of the information about MFOs is available on the website of the Central Bank of the Russian Federation;
• analysis of proposed investment conditions.

How to choose an MFO for investment

The profitability of investing money in an IFC, unlike bank deposits, is still not the only main parameter. The reliability of the organization is no less important. After all, the funds are not actually protected.

Roman Makarov o.

“Therefore,” reports Andrey Ponomarev , “when investing in an MFO, you should, firstly, make sure that the company is included in the register of the Central Bank, and secondly, carefully study its statements. It is necessary to pay attention to the dynamics of the loan portfolio and the level of delinquency.

If a company refuses to provide such reporting to an investor, this in itself is a red flag. On the contrary, reliable, financially sound companies are willing to share their performance with investors.”

Rating of MFOs and MFCs for investments in microloans

The microfinance market situation is changing rapidly. Moreover, given the difficult economic situation in the country caused by the coronavirus epidemic and falling oil prices. Therefore, the rating of MFOs below for investing in microloans reflects the situation as of mid-April 2020.

Quick money

One of the oldest microfinance organizations in the country, operating on the market for more than 11 years. Offers a convenient procedure for attracting investor funds, which includes three stages:

1. Filling out an application on the IFC website.
2. Signing the contract.
3. Transfer of funds by bank transfer to the company's account.

Basic investment conditions:

• interest rate – from 13% to 15.5%;
• amount – from 1.5 million to 150 million rubles;
• term – from six months to 3 years;
• interest is received monthly or at the end of the contract.

The easiest way to calculate the amount of income received is using the calculator posted on the IFC website.

Money Man

Another “veteran” of the microfinance market. MoneyMan is deservedly considered one of the most recognizable brands. IFC offers simple and clear investment conditions:

• two term options – six months and a year;
• three types of currencies - rubles, American dollars and euros;
• amount – ranging from one and a half to 20 million rubles. (from $30 thousand to $20 million);
• return in rubles is 11% and 13%, respectively, for semi-annual and annual investments (for investments in dollars - 9% and 12% according to a similar scheme, in euros - 8% and 11%).

MigCredit

The company has been operating almost since the creation of the Russian microfinance services market. It is one of 35 operating multifunctional complexes and has 73 offices located in different parts of Russia.

MigCredit offers favorable investment conditions, which provide for receiving from 13% to 14% percent of income. The investment amount varies from 1.5 to 200 million rubles, and the period - from 3 to 12 months (in increments of 3). To calculate the income received, an online calculator posted on the website is used.

Zaimer

MFC Seimer has been operating since 2013. The company attracts funds from individuals, individual entrepreneurs and legal entities on the following conditions:

• interest rate – from 13.5% to 18.5% (depending on the duration of the investment);
• term – from six months to 3 years;
• amount – from 1.5 million to 20.0 million rubles.

Income is calculated using a convenient service, which is located on the corresponding page of the IFC official website,

Mutually

The last microfinance company included in the Central Bank register. Operating on the market since 2020. Invites both individuals and legal entities to cooperate. Offers the following conditions for investing in IFC business:

• interest rate – from 14% to 18.5% (depending on the term and capitalization of interest);
• investment period – from 3 months to 3 years;
• amount – from one and a half to 10 million rubles.

VIVA Money

The company was included in the register of the Central Bank of the Russian Federation in December 2011. Currently operates as MFC "TsFP". The terms offered to investors are as follows:

• rate of return – from 15% to 21% (depending on interest capitalization and investment period);
• amount – 1.5-20.0 million rubles;
• Duration of investment – ​​from 3 months to 3 years.

CarMoney

MFC "KarMani" has been working in the domestic MFO market since its formation. The company offers to invest in business using one of two possible options. The first product is called “Income” and provides for monthly interest payments. The conditions for raising funds are as follows:

• profitability – up to 18%;
• duration – up to 36 months;
• amount – from half a million for legal entities and from one and a half million for individuals.

Second investment product. It involves capitalization of interest. The difference in investment terms is the interest rate. In the second case it reaches 20%.

Webbankir

MFC "VEBBANKIR" attracts funds from investors for a period of 3 months to 3 years. The interest rate varies from 13% to 18%. It is determined taking into account the capitalization of interest and the duration of the investment. The investment size ranges from 1.5 million to 15.0 million rubles. To calculate the profit received, an income calculator located on the website is used.

Lemon.online

It is a crowdlending platform intended for both borrowers and investors. Work on it is carried out under the MCC SME Online brand. Therefore, significant restrictions are imposed on raising funds.

At the same time, cooperation with Lemon.online provides a number of advantages, including:

• the minimum amount for entry is 1 thousand rubles;
• flexible investment conditions;
• high yield, reaching up to 36% per annum;
• investing money in various businesses with constant access to a deposit.

Lime-Loan

MFC "Lime-Zaim" is one of the most famous participants in the Russian microfinance market. The company actively attracts funds from investors, which can be individuals, individual entrepreneurs or organizations.

The popularity of IFC services is explained by favorable investment conditions, which include:

• investment of funds in the amount of 1.5 million to 30.0 million rubles;
• the duration of the agreement with Lime-Loan is from six months to 3 years (in 6-month increments);
• payment of interest according to one of three options - monthly, quarterly or at the end of the contract;
• interest rate, which ranges from 11% to 20%.

Zaymigo

MFC "Zaymigo" has been operating in the microfinance market since the second half of 2013. The company is engaged in attracting investments on the following terms:

• interest payment – ​​monthly or upon completion of investment;
• term – from six months to two years;
• amount – from 1.5 to 5.0 million rubles;
• rate of return – from 16% to 23%.

How to become an investor?

To become an MFO investor, you will have to spend a little more time than it takes to apply for a microloan. The whole point is that the client must familiarize himself with all the company’s proposals, then stipulate the conditions to which he agrees, and only after that a standard contract will be drawn up.

Depending on the method of concluding the agreement, the period for completing the investment will also change. Clients have 2 options to choose from: online application and registration during a personal visit to the office

companies.

In the first case, the client selects the one that suits him among the organizations offered on the Internet and, going to the main page, does the following:

1. registers on the selected resource;
2. submits an application indicating his contact information;
3. the manager contacts the potential client by phone and talks about the features of cooperation;
4. A questionnaire is sent to the specified email to fill out, indicating the investment period, amount and additional conditions at the request of the client;
5. after sending the completed form, the manager draws up an agreement, which is delivered by courier for signature;
6. When the documents are signed, the client is provided with an account where the agreed investment amount must be transferred.

From the moment the contract is signed and funds are transferred to the IFC account, the client begins to accumulate investment income

, and depending on the terms of the contract, receives its interest: once a month, quarterly or at the end of the investment period.

In the second case, the client goes directly to the MFO branch, taking his passport with him. The consultant helps draw up an agreement, after which the client is given a printed contract for signature. You can deposit money either in cash or by bank transfer.

. But to guarantee the safety of your own funds, it is better to use non-cash payments and keep supporting documents.

To summarize, IFCs do offer a higher level of return on investment than banks. If you carefully analyze all the factors and give preference to a proven company, then the investor will actually be able to receive the expected income without the risk of being deceived.

If you have doubts, but want to try your hand at investing and not go broke, it is better to insure your deposit with an insurance company.

TOP offers of 2020 for investments in loans

Even a quick analysis of the above proposals shows that cooperation with microfinance organizations is much more profitable than working with banks. Several of the most preferable options in terms of profitability are presented in the table.

Operating principle, advantages and disadvantages of MFOs

It is no secret that the majority of Russians used the services of banks providing loans for various purposes, while many were never able to fulfill their “dream of their life.” The fact is that not everyone can get a loan from a bank, and there can be a lot of reasons for this - from a lack of documents to a bad credit history. When applying to a microfinance organization, the client is required to have a minimum of paperwork, and, as a rule, there is no need to even confirm income. The decision is made instantly, and “payday money” is issued immediately, albeit at high interest rates.

At its core, an MFO is a legal entity that carries out microfinance activities for the population, and the amount of the microloan, according to current legislation, should not exceed 1 million rubles.

By the way, since 2020, all MFOs have become known as MFCs, or microfinance companies. Their main difference from most organizations authorized to provide loans to the population is the social orientation of their activities. Even the unemployed, a start-up entrepreneur and enterprise can get a loan here; funds issued “in a hurry” will also help you receive timely medical care, pay for education and cover your utility debt. Despite the fact that microloans have been issued in Russia for a long time, the real microfinance boom has occurred in the last six years, when the number of consumers of microcredit products increased fivefold.

Microloans are periodically taken out by about 100 million Russians, and over 400 thousand entrepreneurs and small businesses are also serviced by the IFC, while the average loan amount is 60 thousand rubles, and no more than 3% of those borrowed are in arrears.

According to the provisions of Federal Law No. 151, microfinance organizations have the right not only to issue loans (the basis of profit), but also to attract funds from investors, including individuals. The law states that an MFO can accept at least 1.5 million rubles from one private investor, and the minimum entry for legal entities is 100 thousand rubles. This limitation puzzles many investors who begin to look for the pitfalls and disadvantages of this investment option.

How to invest in microfinance organizations?

In most cases, the procedure for investing in microfinance organizations is extremely simple. It provides for three main stages of formalizing relations between an investor and a microfinance organization:

• submitting an application on the MFO website;
• preparation and signing of a loan agreement between the client and the microfinance company;
• transfer of investor funds to the IFC account specified in the agreement.

How is interest paid?

Interest is paid in one of two ways. The first provides for a monthly (less often quarterly) transfer of income to the investor’s account, and the second provides for the capitalization of interest and taking it into account in further calculations on the deposit.

The advantages of each option are obvious. Regular receipt of interest makes investing in microfinance organizations a source of passive income. Interest capitalization increases the overall return on investment.

Comparison of MFOs with other investment instruments

The main advantage of MFOs is good profitability, which exceeds deposits in banks and is comparable to profits from trading shares. Below we compare investments in microloans with other ways to increase capital.

Lack of insurance coverage

Unlike bank deposits, which are protected by the Deposit Insurance Agency up to 1.4 million rubles, investments in microfinance organizations do not have any guarantees. Everything an investor can do, buy an insurance policy on their own, is fraught with a decrease in profitability and additional costs.

High profitability and contribution

Compared to other well-known investment instruments, if you invest in MFOs, you can count on significant capital gains. According to the data, the rate of return can be up to 36% per year. Other products demonstrate the following indicators:

• Deposit – 1–1 1%.
• Investment life insurance – up to 25%.
• Individual investment account – from 10 to 20%.
• Trading shares on the stock exchange – about 20%.

But don’t forget about the size of the investment. If some brokers provide access to financial markets from as little as a thousand rubles, then cooperation with microfinance organizations starts from half a million.

Taxes and early termination of cooperation

Not all investment vehicles are taxable. For example, you don't have to pay income tax on government bonds. But on income from investments in microfinance organizations you will have to pay 13% personal income tax. Note that the microfinance organization will handle the deductions, and the citizen will receive a “net” income. The money is paid to the investor's individual account.

In addition, as indicated in the table, many microcredit companies allow their investors to choose a convenient way to receive interest, up to monthly payments. In turn, most other instruments require payment of remuneration only after the completion of the contract. If cooperation is terminated unilaterally at the initiative of the investor, then he loses all profits.

How to invest in PDA?

CCP or consumer credit cooperative is another investment option. It is a non-profit organization that is created with the purpose of providing participants with mutual financial assistance to each other.

The activities of the CPC are also regulated by the Central Bank, but to a noticeably lesser extent than the work of the IFC and, especially, banks. Therefore, participation in CPCs should be approached extremely responsibly, since a high level of possible profitability is accompanied by similar risks. The list of consumer credit cooperatives legally operating in Russia can be downloaded from the official website of the Central Bank.

How interest is paid

When the organization receives your money, the process of accruing interest begins. They accumulate in the same way as with a bank deposit.

There are two ways to pay interest:

• Monthly or quarterly during the term. At the end of the term you will receive the principal amount of the deposit
• At the end of the term along with the principal amount

The payment method is specified in the contract. You can choose which one is more convenient for you. You will receive the money in your bank account, the details of which must also be indicated in the contract.

For late payment of interest, IFC is obliged to pay you a penalty. It is a separate percentage of the amount of money invested. The amount of the penalty is specified in the contract.

Investing in real estate loans

The activity of issuing loans secured by real estate differs from the options for investing savings described above in two fundamentally important ways. On the one hand, such financial transactions seem reliable, since they are backed by liquid assets.

But on the other hand, the work of organizations performing such transactions is controlled by the Central Bank of the Russian Federation even less than by the CCP. Therefore, when making an investment decision, you should remember the main rule of the investor: high profitability is accompanied by high risk.

What it is

Having a certain amount of banknotes on hand, you need to clearly decide what to do with them in the future. Simply spending it is irrational, and storing it under your pillow is stupid. Money should always be in circulation and bring significant profits.

The constant growth rate of the number of microfinance organizations creates a demand for deposits in microloans. How it works? In Russia, a huge number of citizens use the services of microfinance organizations.

This is due to several factors:

If there is a demand for the services of microfinance organizations, then there is a demand for attracting financial resources.

The scheme of cooperation between a company and a private investor is simple:

The investor's profit lies in the difference between the interest at which money is invested in the company and the interest on loans issued to the public. Attracting investments at a rate of 20-30% per annum, they issue this money at 100-1000% per annum, or even more.

Microfinance organizations issue loans with high interest rates, but also attract funds at rates favorable to investors.

Video: investments in microfinance organizations (microloans)

What attracts

The main attractiveness of investing in microloans is their high profitability. No other investment project can offer investors such high interest rates in a short time (you can independently choose the investment period from 1 month to 2-3 years).

Even as a VIP client of the bank, you will not be able to receive more than 15% per annum on your deposit. MFOs guarantee their investors an average return of 20-40% per annum.

If we conduct an independent survey among those who invest in microloans, the majority will list the following advantages of such investment:

How to ensure the safety of deposits

If you decide to invest in microloans, it would be advisable to think about the safety of your funds.

Do not confuse investments in microfinance organizations and bank deposits. The latter are protected at the state level by the DIA (compulsory insurance) system.

Such insurance guarantees investors in the event of negative developments (bankruptcy, revocation of a license, etc.) a refund of funds in the amount of 1,400,000 rubles.

As for other organizations, there is no state insurance system for them. Most companies use voluntary insurance. That is, when investing your money, you have the right to insure your investment.

There are two options to protect your own funds:

It's important to remember that in the financial world, the word "investment" is always associated with the word "risk."

Therefore, if you want to increase your capital in this way, you need to realistically assess the situation and existing risks.

Taxes and other expenses

The responsibility to pay income tax lies with the investor himself. He must pay 13% of the profit received.

For example, you invested 2,000,000 rubles in the IFC and earned plus 50% of income in two years, i.e. another 1,000,000 rubles. Of these, 13%, i.e. 130,000 rubles must be paid to the state treasury.

You will need to file your tax return by April 31 of the following year and have until July 31 to repay the debt. Otherwise - a fine and a very shame.

Other expenses may include:

• bank commission for transferring funds;
• insurance;
• preparation of statements and certificates.

But, as a rule, they can be avoided, and the most important expense is tax.

And here’s another interesting article: History of the microfinance market from antiquity to the present day

Examples of investments

Let's take a closer look at the investment conditions in four large companies:

• Home Money;
• Fast Money;
• Money Man;
• Just borrow it.

All companies have been present in the financial services market for a long time and have proven their integrity and stability.

As can be seen from the table, all companies offer tempting returns, which cannot attract a potential investor. For individuals, an investment amount of less than 1.5 million is not even considered. Some companies offer to receive income in the first month. What is most attractive is that companies love their investors and pay special attention to each.

Of the above conditions, special attention deserves. It has been present in the financial services market for a long time, has good reviews and stable financial performance. Profitability is at a fairly high level.

However, you should not make a choice in favor of one company or another based only on these indicators. As already noted, it is worth taking all factors into account. This market segment is still in development, and investing large amounts of money is quite dangerous.

You can also pay attention to the microfinance company Mani Fani, which offers returns of up to 26.4% per year and the Investment Center, which is ready to pay its investors up to 33% per annum.

Let us draw conclusions, dear reader. Investing in microfinance companies is a very tempting business, but risky. If you are a competent and prudent investor who has experience working with financial instruments, then you should think about this method of multiplying your capital.

Requirements for IFC for investments

In order for a microfinance company to attract investment, it must meet the basic requirements:

• availability of a license from the Central Bank of the Russian Federation to conduct activities;
• own capital – at least 70 million rubles.

At the same time, companies are under increased control from supervisory authorities.

In general, everything has been done to increase the level of reliability. But, as the Home Money example shows, this is not always possible (spoiler alert: Home Money technically defaulted on its bonds).