Many MEI (Individual Microentrepreneur) workers aspire to own high-value assets, such as houses and vehicles, but believe it's impossible. However, MEI financing can be a solution, as it's feasible to pay more affordable instalments over a longer period of time. Is this your question too? Find out how this category works. Happy reading!

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How does MEI financing work?

One of the main concerns of those working as MEI is whether or not it's feasible to get a mortgage without a formal contract.

If you're a micro-entrepreneur with aspirations of buying a house or car, you should know that it's possible.

Read also | BNDES Loan for MEI - Understand How to Apply

One of the requirements that credit agencies usually need for this is that you provide proof of your monthly income. In other words, you must provide documentation of income.

This is because the bank or financial institution needs to determine whether the consumer may present risks, such as default or missing instalments. This phase of financing is known as credit analysis.

In the past, a payslip was the only method of establishing monthly income. But as new occupations evolved, new models emerged to accommodate all individuals.

Next, investigate ways to demonstrate income in your finances as an MEI.

How do I establish which income is MEI?

Firstly, each bank or financial institution has restrictions on what documentation is acceptable to establish MEI income. Always check with them to determine if more paperwork is required. Despite this, most documents are identical:

• Bank statement
• Income tax return
• Autonomous Payment Receipt (RPA)
• Statement of Evidence of Perceived Income (DECORE)
• Annual Statement of Accounts (DASN-SIMEI)
• Service contracts

The benefits of financing

Firstly, by financing a high-value asset, you don't have to wait until the end of the payment period to buy the asset.

One of the biggest advantages of financing is that the property or vehicle can be used as soon as the credit is accepted.

Another advantage of this method is the ability to maintain current accounts. In the end, as you'll be able to make the instalments over a longer period, they can be cheaper. Consequently, this loan won't affect your monthly income.

However, you must know how to handle your finances to avoid the mortgage becoming an unpayable obligation. What's more, you'll be investing in personal property which, unlike renting, will be entirely yours at the end of the term.

Ultimately, if you manage to raise the financing funds, you can pay off the loan. Although it's a cost-saving resource, you can pay off the loan if you have the necessary resources.

What's the difference between a mortgage and a loan?

The distinction between loans and financing is a frequent source of confusion. The main distinction between these groups is their respective functions.

A mortgage is a form of loan, but it serves a specific purpose, such as buying a property. In other words, it can't be used to pay for any other expenses.

A loan, on the other hand, is a sum of money borrowed from a bank and then paid back with interest. In general, they have different objectives.

Types of financing

As well as allowing micro-entrepreneurs to fulfil a wish, such as buying a house and avoiding renting or financing a new vehicle, MEI financing can be a new investment.

In this sense, there are various ways of financing the MEI. Find out more below!

• Property financing for MEIs;
• Vehicle financing for MEIs;
• Student finance.

What financing documents do MEIs need?

In addition to proof of income, MEIs must also submit other documentation proving their eligibility to seek funding.

Consult the company about the documents that must be provided as an initial step. However, the documents are generally as follows:

• Individual's documents: General Register of Individuals (RG) or National Driver's Licence (CNH) with Individual Taxpayer's Register (CPF);
• Birth Certificate (single) or Marriage Certificate as proof of marital status (married). Divorced couples, on the other hand, must present the divorced marriage certificate or the Contract of Stable Union.
• Voter registration;
• Joint certification of federal tax obligations;
• Current proof of residence.

MEIs who have already been employed and wish to use their FGTS balance for financing must present their Guarantee Fund statement and a copy of their work permit.

How to finance MEI?

In general, the MEI is financed in five stages:

1. Financing simulation: based on your monthly income, the simulation helps you determine the financing amounts, whether you are entitled to any benefits and the payment methods available to you. It's therefore a great way to help you understand your financial expenses;
2. Credit analysis: the bank or credit company will assess the documents provided and your financial profile to determine whether you are likely to default on the loan agreement.
3. Evaluation of the product or service: If you want to finance a house through Caixa Econômica Federal, for example, one of the institution's representatives will confirm that the property meets minimum housing standards;
4. Signing the contract: one of the most eagerly awaited moments is when the business approves your financing request and you finalise the agreement.

This contract must be registered and notarised to be valid.