Microloans are small amounts of money, generally in the 100s of dollars and issued from non-governmental organizations (NGOs) in developing countries. You may have also heard of small business loans being called microloans in the US, but the impact of these programs is unique. They are often given to women who would not otherwise be approved to borrow money from banks in their home country. In many countries, women still do not have equal access to financial resources as men. In other cases, what these talented individuals need in terms of US dollars can go a long way and the amount of debt can often be paid off very quickly because of low interest rates, and they have a short repayment period. These small businesses offer farm products, technology, and offer various services to their communities.
Microlending has grown to offer the full range of financial services that most business owners need to run effectively. It’s called microfinance now and has seen a tremendous amount of success in Africa, Asia, and the Americas. One such agency is call Microcredit Summit Campaign (MSU). MSU is a loan administration program that was founded in 1997. Lenders join, and their resources have been pooled to help over 100 million people. What makes microfinancing unique is that recipients are empowered by their work and lift themselves out of poverty. “India was the leader in terms of microfinance in 2016, with 47 million borrowers and roughly $15 billion in outstanding loans.” Now, they are becoming more enhanced programs that address needs that are health-related and other non-financial needs. BNP Paribas. Organizations are working now to determine what loans can make the greatest impact, in what is called “impact investing”, on a community along with a financial return. GIIN These efforts aim to alleviate largely unaddressed issues of health, safety, and childcare that prevent local entrepreneurs from successfully pursuing business opportunities on their own.
Microfinance will only continue to grow and more of the undeveloped world gains access to informational resources through the internet. Although innovators might live in isolated villages, they can discover global microlending programs and be discovered by non-government organizations such as these that have programs for which they qualify.