Extend Microloans to Help the Low-Income Entrepreneurs

Extend Microloans

Within last few years, many third world countries have achieved constant economic growth and development. But millions of people in these countries still live in these countries without access to clean water, sanitation, renewable energy, primary healthcare and secondary education. Similarly, many rural entrepreneurs find it difficult to get small businesses loans from commercial banks to become self-sustaining.

Despite being a relatively new investment option, micro loans have been effective in transforming the lives of millions of small and rural entrepreneur entrepreneurs living in India, Pakistan, Bangladesh and other third world countries. Normally, these loans are small to medium sized, but you can make a huge difference to the lives of underprivileged people by granting a loan amounting to a few dollars. In addition to getting you constant returns, the micro loan will also have a substantial impact on small entrepreneurs who fail to meet the lending criterions of commercial banks.

Low Rate of Interest

In comparison to the commercial banks, the organizations facilitation peer to peer lending offer micro loans at a much lower interest rate. Further, the size of the microloan is decided to suit the occupation and capital requirements of the borrowers. So the borrower can repay the entire loan amount a per the predetermined repayment schedule without increasing his financial burden.

No Collateral

Many small and rural entrepreneurs do not have any asset to use as collateral while taking loans from commercial banks. As an investor, you may hesitate to grant a large sized loan without any collateral. But you can easily grant a microloan amounting to a few dollars by evaluating the business model and repayment plan of the entrepreneur. The investment can further make a huge difference to the living standard of the borrower and his family.

Flexible Repayment Schedule

The commercial banks normally require borrowers to repayment the loan as per a predetermined schedule. So the lending model is not suitable for the small and rural entrepreneurs. The organization offering microfinance in India often decide the repayment schedule for a borrower by keeping in mind his nature and type of business. Further, the EMIs are adjusted by keeping in mind the monthly income and expenditure of the borrower.

Peer to Peer Lending

Many people donate money to charitable organization and NGOs to run developmental and welfare projects in third world countries. But the donor does not have any option to evaluate the impact of his donation on an individual borrower. Unlike the charitable institution, the microfinance institutions will treat your contribution as a small business loan. Also, you can extend the microloans through online peer to peer lending platforms to extend your financial support to a borrower of your choice, after checking his identity, location, occupation and capital needs.

Complete Transparency

Often the NGOs and microfinance institutions are criticized for lack of efficiency and transparency. But many online micro lending organizations have built a reputation in accepting microloans from investors after explaining the repayment mechanism and risk factors in a clear and transparent way. Once you grant the microloan, the institution will lend the money out to the borrower selected by you. Further, the entrepreneurs are asked to keep the lenders informed about the utilization of funds and repayment progress.

Option to Decide Risk Acceptability

You have options to achieve a number of objectives by granting microloans. In addition to helping the third world entrepreneur, you can also distribute the money as securities and guaranteed loan. Many investors even distribute microloans as an investment option to get constant returns and supplement their primary income source. So you can easily decide the micro lending options to suit your investment plan and amount of acceptable risk.

There are a number of online peer to peer lending platforms that have made it convenient for the lenders to extend micro loans with minimum time and efforts. You can even refer to various online sources to choose the right organization providing microfinance in India for a cause you are passionate about.

For The User 

******Usman ahmed owner of this blog created this post with his knowledge.All content provided on this blog is not copied from any other blog and site and is for informational purposes only and  The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site.The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information.