Taking a Look at Microlending

Micro-lending is a very useful tool for individuals who have a hard time getting a load from a bank. It is designed for persons who are unemployed, entrepreneurs, or living in some poverty. Normally a bank will not grant you a load if you do not have a good paying job or anything to your name. The idea is to not give huge amounts of money to people but rather a small amount, because chances are you will never get the money back if it is a large amount. Most of these individuals do not have many ways to pay back the loans because their financial history is not that great. They are also known as fledging entrepreneurs because that loan might help them start up a successful business. The companies that give out these loans are usually not for profit, but they will charge a certain amount of interest. This is so that they are able to keep the company running and pay the salaries of its employees. They are not in it for the money but to help out the people in need, after all this concept is mostly used in developing countries such as Bangladesh. Now the loan is not just limited to developing countries, it is also available in developed countries like ours. While a person in a developing country may only require a $500 loan to start a business a poor individual might need something like $20,000 in the US to start a business. This is mostly due to our higher cost of living in most developed countries. They don’t just offer money for startup a business but also give knowledge and training on how they can make the business successful. This is a good idea because without it they would run a higher risk of not any returns. Now to be eligible the business must have less than 5 employees total, and can only ask for an amount under $35,000. Not...

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... wants to get money for her education, it will probably be a long time before anyone gets the money back because she is still in school and has to provide for 5 sibling and also 2 parents who do not have jobs. Her ambition to become a dentist isn’t a selfish one though; she is doing it to help her community by opening a clinic in the public sector. She needs $5,275 and has only raised 30 percent of it so far. Her payments are due starting March of 2017, or in 111 months. This doesn’t look like a loan that anyone cares to get money back on but more like a charity to help someone who actually needs it. She has a irregular payment schedule set up meaning she doesn’t have a set time of when payments will be due every month. Her partner FUNDAPEC charges a 13% minimum interest rate and has a very low profitability rate. They are obviously in it to help, rather than money.