Individual Banker: understand the type of loan between individuals

Individual Banker: understand the type of loan between individuals

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One of the biggest problems for individuals and many entrepreneurs today is access to credit. After all, we usually face financial situations where the immediate income we have is insufficient. It's the individual banker it is a type of credit that can contribute positively to this.

And the best: without the same problems as a overdraft, for example, which has very high interest rates. As a result, you guarantee more stability in meeting deadlines and are able to plan financially according to your goals.

But what is the individual banker about and how does the whole process work? In the topics below, we’ll cover everything you need to know about the subject. Check out!

What is the individual banker?

Recently approved at the National Congress of Brazil through the Complementary Law No. 167, the individual banker is a legal project to allow loans between individuals without the need for (or being required) the intervention of banks or financial institutions.

The measure has been in force since April 24, 2021 and, in practice, offers more flexibility to the consumer when requesting credit with more attractive interest rates and so that loans are no longer so centralized in companies – or even make us resort to other measures, some illegal and dangerous, such as the loan shark loan.

There are, however, some rules and conditions that must be respected in order to allow interested parties to enter the modality of individual banker to grant credit to other people.

How does the individual banker model work?

The term to conceptualize the work of an individual banker became known as ESC – acronym for Empresa Simples de Crédito. In general, are companies that can be managed by a single legal entity or a group of individuals, such as a finance company, to offer the credits desired by the population in need to pay off debts or undertake with an extra income.

As a result, the Simple Credit Companies increase competition in the sector, something that can probably be perceived in the medium term, but which already has immediate positive consequences for the general public. And interest rates are the most impactful effect of that.

In addition, to be an individual banker and open your ESC, interested people have to:

  • be a legal person responsible for the enterprise;
  • having an individual entrepreneur registration;
  • have an annual and gross salary income of £ 4.8 million, at most;
  • carry out its activities to the municipality where it resides or, at most, to the neighboring cities.

Who will take care that these rules are met is the Civil Code. It is always important to also count on a good accounting professional to deal with all procedures in a responsible, transparent and effective manner.

What are the interest rates charged by the individual banker?

Let’s start with the basics: although the individual banker doesn’t have Central Bank interference, it means that there is no parameterization regarding the interest rate.

However, some things can take into account the fact that they will be more attractive rates than those practiced by conventional financial institutions. THE Usury Law, of 1933, prevents interest rates from exceeding twice the value.

With this, many experts point to the possibility of self-regulation of this very recent sector. After all, it is precisely because of its freshness that are considering lower rates to attract customers, avoid default and popularize the individual banker model.

It is worth noting, however, that attention to the best rates and payment conditions requires extra care when searching for ESCs in the market. Do a lot of research and do several simulations so that the granting of credit is, in fact, advantageous for you and according to your financial planning.

What are the risks associated with the individual banker model?

As with all types of credit granting – whether through consortia, financing or loans, among others – there are risks in requesting the services of an individual banker through his ESC. Even if it is an activity with good potential for easy access and absence of excessive bureaucracies.

Even so, it is worth emphasizing that such attractions can also be financial pitfalls for those who are not cautious when taking care of their assets and, also, knowledge to manage finances. On here, the precautions are the same as applying for a loan from any other financial institution on the market.

In fact, in order to know a little more about loans and their real needs, it is worth staying on top of another article of ours that specifically explores the relationship between financial crises and borrowing! Leave the reading saved to start as soon as you finish this post!

What are your doubts about the individual banker?

Now that we have seen everything that has understood the proliferation of this new type of credit in the financial market, how about we reinforce the most important points of this novelty based on a quick model of questions and answers?

Check out, below, what the individual banker is and his future Simple Credit Companies!

Can anyone open a Simple Credit Company?

Yea, as long as the individual respects all the rules imposed to open an ESC. this adds more security and control for the individual banker model to be successful in the short term.

What are the interest rates charged?

Although there is still no clarity on the subject, it is worth pointing out that the first Simple Credit Company performed the service of an individual banker with a monthly interest rate of 3.5%.

Who monitors the individual banker?

As we have highlighted, the Central Bank does not interfere through its supervision in this type of activity. However, this does not mean that there are no rules and controls. On the contrary, the activity of the individual banker has to be registered with entities that are authorized by the Central Bank or even by the Securities and Exchange Commission.

Which taxes should the individual banker pay?

The individual banker cannot adapt his business to the Simple national. For this type of activity, only the taxation regimes based on actual or presumed profits are allowed.

You can stay on top of the developments in this subject, you know? After all, a lot can still (and will) happen allowing for an increasingly better and qualitative regulation of the work of the individual banker. For this, take the opportunity to like our page on Facebook and follow us on Instagram, Twitter and LinkedIn to stay on top of all our tips and news!



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