“[Micro financing] is the backbone of our economy.” Micro financing helps stimulate small businesses and helps support the economy, including larger corporations. In order to explore this topic further, we interviewed Michael Stewart, who is a financial advisor of twenty-three years, a Certified Financial Planner (CFP), an Accredited Asset Management Specialist (AAMS), and has his Bachelors of Science and Business Management and degrees in Financing. The information gained in the interview helps explain the specific importance of micro financing and what impact it has on the American economy.
According to Stewart, micro financing is the ability of a small business to get loans for which they might not qualify. In order to get loans, they have to seek alternative methods, such as small business loans through a small business development center or through government entities. These loans will usually range from $1,000-$30,000. On average, these loans are around $24,000-$25,000. The primary use of micro financing is as a kick-start for new companies that need a little bit of a boost to get off the ground. The idea is that these companies will after time grow enough that they will no longer need to use microfinancing and they can apply for more traditional loans. Because of this, most economies do not implement microfinancing as a source of potential bailout for those companies who are not doing so well.
The role it plays in the economy is enormous. When one looks at the economy, they will see many large publicly traded companies. The small businesses receiving these microfinancing loans strongly outnumber the corporations (Stewart). In terms of production, although a large company will produce more than say, a small busin...
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...to the idea both give insight into the effectiveness and sustainability of this practice. He provides a bright outlook for the future of these types of practices when he says that micro financing is “becoming more and more of an accepted way of financing” as opposed to being seen as what he calls a “last resort”. The increasing popularity of microfinance is good for the entire economy but especially those small businesses that Stewart stresses as crucial components of our economy.
Works Cited
"Unbanked in America." Microfinance Gateway. 28 Sept. 2011. CGAP 2013. 19 Nov. 2013 .
“Examining the roles and future of microfinance” The Guardian. 11 Dec. 2012. Web. 21 Nov. 2013