Borrowing money from a bank allows individuals to access money at relatively low interest rates so that they can pay for necessities, or pursue opportunities such as job skills development, or opening a new business. As anyone with a low income knows though, banks want to lend money to borrowers that already have enough resources to repay the loan.
Lenders typically try to avoid giving money to people with small or no income because they worry that they will never get repaid. Microfinance loans attempt to correct this problem, so that less affluent people can pull themselves out of their situations, or so that new businesses who may be struggling with the acquisition of start-up capital can access the funds they need to get their business off the ground.
Loans for Small Businesses Without Much Money
The reality is that it’s hard to get a loan when you don’t have any money, and this is often the case for new businesses just starting out. Attempting to secure a small business loan or business line of credit that is great enough to actually meet the needs of a new business and all the requisite expenses can be a trying situation. And this is where financing options like microfinance loans can help out. Microfinance loans take banks out of the equation so that small businesses without the necessary means can have easier access to small amounts of money.
When small businesses without large capital reserves are presented with the opportunity to borrow, they can start making choices that will potentially create success for a number of people, and taking advantage of any one of numerous microfinance loan sources can be a great start. Organizations like Kiva connects borrowers and lenders, allowing individuals to lend and borrow as little as $25, making terms affordable and low-risk. World Vision also allows individuals to lend as little as $25 or as much as $5000, and boasts claims that 98.7% of its microfinance loans are repaid.