What are microloans? What have they done for small businesses around the world? How does this affect economies?
Microloans are an important and growing part of the American financial system. Micro lenders will extend microloans that typically range from $500 to $50,000 to people and businesses. Unlike traditional bank loans, which are typically for larger amounts, microloans are accessible to a much larger portion of the population. Micro lenders will approve a wide range of applicants, some of whom might not be able to secure loans from other institutions. The repayment term for a microloan usually lasts between one and three years and the interest rate in many cases are below ten percent. Microloans help many facets of the American economy and are an important tool for small businesses. Microloans don’t only supply financial assistance, they provide Americans with the opportunity to enhance their businesses and improve their quality of life.
Microloans: The Global and Economical Implications
Since their inception, Microloans have had a powerful effect on countries throughout the world. In many places, such as Africa and Asia, traditional lines of credit are not available to sizable portions of the population. When these people are in need of a line of credit or cash to pay bills or start a business, they can turn to Micro lenders for assistance. By bridging the gap between those who have access to credit and those who do not, microloans help stabilize the global economy. Though microloans may be small in monetary value, their impact on the local economy is sizable. The global economy, at its core, is composed of all the local economies across the world. Therefore, when the economies throughout the world are expanding on a local level, there is real growth on a global scale. All economies need small businesses and the crucial services they provide to remain solvent. Without microloans keeping small businesses healthy and making local economies stronger, the global economy would be much weaker than it is today.