What Is Microlending & Is It Right for You?
According to microlender Kiva, more than 1.7 billion people around the world are unbanked and can’t access the financial services they need. This subset of individuals and small businesses falls outside of the parameters of traditional lending, making them perfect candidates for microlending.
For entrepreneurs whose credit or circumstances make the risk of default high, crowdfunded or peer-to-peer financing, such as microlending, offers monetary opportunities that are not available elsewhere. But let’s dig in a bit more.
Skip to:
- What is microlending?
- How does microlending work?
- Microlending Benefits & Risks
- Microlending Organizations
Microlending involves lending small amounts, usually less than $50,000, to financially challenged individuals or organizations that are unable to obtain conventional loans from banks or credit unions. These modest loans may be provided by a single individual or procured from several investors who each contribute a percentage of the total amount. Typically, they feature lower interest rates or capital requirements than conventional financing.