An answer to the small company loan crisis may be microloans. Microloans are more commonly associated with developing nations. But microlending is on the rise in the United States as more smaller businesses are applying for microloans when the bank says no.Congress made a halfhearted try to create a small business lending bill, but the fact that it perished amid partisan backstabbing could mean continued good business for microlenders. Article resource – Microlending blooms as banks refuse for making small company loans by Personal Money Store.
Microlending: what’s good for Bangladesh is good for America
One of probably the most effective solutions to finance growth in the 3rd world has been making small loans to the poor-otherwise known as microlending. But then the Americas economy fell and cannot seem to get up. A New York Times report said that U.S. demand for small loans during the recession and subsequent credit crunch is increasing. The buzz on microlending is getting louder as more companies succeed with the help of microloans. A pilot program for U.S. business owners has been launched by Kiva, which has microlent more than $ 150 million in 53 nations. Grameen Financial institution — a microfinance group based in Bangladesh that was started by Muhammad Yunus, who won the Nobel Peace Prize for his groundbreaking work in microlending — has also widened its lending to Americans.
Partisan politics thwart small company lending
Microlenders are taking up the slack in small company credit as Congress plays partisan games. Bloomberg reports that because senate Democrats failed to get the votes required to advance beyond debate, a bill written to loosen small company credit perished July 29. To jump start small business lending, the bill would have provided banks with less than $ 10 billion in assets $ 30 billion. As their level of lending rose, the cost for those banks to pay back the money would fall. The potential results of the small company lending bill were estimated at up to $ 300 billion in loans. But Republicans wanted to tack extending the Bush tax cuts to the bill while they said it would encourage more risky lending.
Microloans are getting results
Smaller businesses are succeeding with microloans when the Senate quarrels. The Times article features a Silicon Valley restaurant owner whose business was saved with a $ 6,500 microloan with a three-year term at 6 percent interest.The Miami Herald reports that a Miami microlender called OUR MicroLending has underwritten 764 loans adding up to $ 4.5 million. OUR MicroLending customers normally have less than five employees and $ 100,000 or less in annual sales. The lenders microloans average about $ 5,000 in a $ 1,500 to $ 12,000 range.
nytimes.com
bloomberg.com
miamiherald.com
No comments:
Post a Comment