How does micro-lending change how businesses obtain access to capital and move from conception to operation?
When starting a small business, a certain amount of money is needed to get the business off the ground. This money, known as the seed capital, is necessary for the creation of any business. When a person or group of people, do not have enough funds for the seed capital required to start a business, they must look to outside sources. These sources, known as lenders, will loan money to businesses, which will help them move the business from its conception to becoming fully operational. However, not everyone qualifies for loans from traditional lenders such as banks. Many borrowers will be denied a loan from a bank and be left looking for other options to secure seed capital for their business. Microlenders provide an alternative to bank loans and allow for borrowers to have the necessary capital for their businesses operations. Microlending can also help businesses expand. Small businesses in search of growth are able turn to micro lenders, who will provide the business with enough capital to meet a business’s expanding needs.