Many of us may have potentially lucrative ideas, but very few of these are realized due to one main problem: lack of money. No matter how determined we may be or how solid our respective visions are, the chances of establishing a business model or a company will always remain slim without the necessary money to fund it. This was especially true in rural locations and developing nations where communities and individuals may not necessarily have had access to banking systems.
This is no longer the case, however. Microfinancing brings shape and tangibility to what would otherwise have been no more than mere creative thoughts. But what makes this a much more feasible and viable approach compared to more conventional means?
Dream Big, Spend Small:
Traditional banks aren’t as widespread as some may have been led to believe. In fact, they may as well be non-existent to underdeveloped nations. Availability is only the start of the issue, however. Sharone Perlstein, a financial expert, notes on his own personal website that the conditions imposed by banks are usually so high that only a select few can actually meet them as the financial risks may be too much for them to shoulder.
But things are changing. More and more groups and organizations have started seeing the potential that investing in small business in the aforementioned nations can yield. With technology perpetually evolving, the possibilities of economic growth for communities in dire need of it have become a reality, paying dividends and yielding the desired results that some may have thought impossible.
Check The Numbers:
While microfinance may be young, the concept isn’t entirely new. In fact, Sharone’s website also sheds some light on the numbers involved in these microloans. Not only has there been a considerable amount of resources invested in this endeavor, but the loan repayment rate of around 98% is a staggering show of success. Some may look at the available loans as small, but this helps reduce poverty and aids in economic development at a national level.
No venture is without its fair share of challenges and obstacles, and with this in mind, microfinance still has hurdles that it needs to overcome. For starters, the successful results aren’t exactly universal and there are still quite a few borrowers who have been unable to repay their respective loans. The main problem lies with inexperience and the lack of understanding regarding running business loans and other financial elements.
Fortunately, like any problem, there’s always a solution. Many groups have initiated a fix, from offering relevant information to programs that deal with education and mentorship. These admirable resolutions will undoubtedly go a long way to rectifying the issues at hand and establishing microfinance as a permanent solution to financial business troubles.
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