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Microfinance Loans: How Small Loans May Be Just What You’re Looking For

While microcredit loans first originated in the Third World as a way to help launch small businesses thousands of American entrepreneurs are finding it as the alternative solution to traditional lending.

Many of the micro lenders, which are mostly non profits, receive the bulk of funds from the Small Business Administration. Now there are certain requirements to qualify for this small loan but it’s much easier than that of traditional lenders.

The new age of micro loans for small business offers a variety of benefits that can be broken down to the following:

Business Training

The SBA requires that intermediary lenders provide business training and technical support to its borrowers. This educational component that micro borrowers will need to complete before the application is accepted is a step in the right direction.

By adding sound business training and planning more start ups can avoid making costly mistakes resulting in successful loan repayments and building a solid credit history in the process.

Flexible Requirements

Another area that makes these microcredit loans so attractive is the flexible guidelines for loan approvals. While many lenders are unwilling to approve a loan unless you have pristine credit, business history and sufficient collateral micro lenders take other factors into consideration.

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This may include personal collateral and a personal guarantee but what truly separates micro lenders from traditional lenders is the personal character component. Micro lenders take a more hands on approach with its borrowers and go so far as to even contact personal references.

Building Credit

Microfinance loans also provide a way for small business owners to build or rebuild personal credit history. Many applicants are faced with little to no credit history and do not have the collateral that typical businesses use to secure a loan like commercial real estate, accounts receivables or inventory.

As you make payments on your small loan the micro lender reports its payment experience with you to the credit bureaus. This builds positive credit history and increases your level of creditworthiness in the eyes of lenders.

Once a micro loan is paid in full then most micro borrowers are able to qualify for greater amounts of financing through traditional sources if they prefer.

Time

Time is of the essence especially if you are in need of funds for working capital. Waiting for a traditional loan backed by the SBA can take months where microfinance loans can take as short as 14 days to fund.

Keep in mind that each micro lender has its own lending requirements and it handles its own approvals at a local level. You can find more information on SBA’s Guaranteed Loan Programs and a list of approved micro lenders nearest you at the SBA web site.

Some additional micro lenders you may want to consider reviewing are Accion, Kiva, Prosper, Zopa and Lending Club. Each of these lenders has its own requirements, lending limits and interest rates so take the time to review which one best fits your needs and comfort level.

The recent economic crisis created a huge demand for this new age of finance called micro lending. With the SBA stepping up to the plate and allocating million in funding for its micro loan program it’s no surprise that this financing option is going mainstream.

Whether you’re just beginning your first business venture or need the working capital for an existing business, this small loan may just be the solution you’ve been looking for.

Tags: just, Loans, Looking, Microfinance, Small, You're

Women’s microfinance loan, 2011 microfinance services nigeria, micro lending business plan

www.ourmicrolending.com Apply for women’s microfinance small business loans Online in the usa and microfinance commercial business loans, 2011 microfinance services nigeria, micro lending business plan to fit everyone. We are a specialized institution, dedicated exclusively to serve the needs of micro-entrepreneurs through micro-credits and micro-finances. We offer an alternative financial service for entrepreneurs that have needs that are not attended by regular banking institutions in the State of Florida.
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Tags: 2011, Business, Lending, Loan, Micro, Microfinance, Nigeria, Plan, Services, Women's

Banking on Small Business: Microfinance in Contemporary Russia

Banking on Small Business: Microfinance in Contemporary Russia

How do you prime the well of economic growth? First, put a negligible amount of money into exactly the right hands. Then, step back. A vibrant and rapidly expanding national economy needs an active small business sector, but small entrepreneurs need loans to expand their businesses. Microfinance also has potential to be an engine of economic growth, although this prospect has been overshadowed by its image as a tool for alleviating poverty. In Banking on Small Business, Gail Buyske analyzes thre

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Tags: Banking, Business, Contemporary, Microfinance, Russia, Small

Rising From the Wreckage: How Microfinance Services Help in Times of Trouble

Eduarda Rodriguez watched helplessly as her livelihood went up in an ominous tower of flames. She had been slowly building up her market stall business in this back corner of the Mercado Huembes in Managua, Nicaragua for over a decade. The vegetable stall, though humble, was the lifeline that supported Eduarda and her nine children. And, just like that, the fire reduced it to a bed of smoldering embers.

As we witnessed in Haiti this year, calamity often lurks just around the corner for the 2.7 billion people worldwide living on less than $2 a day. Whether victims of an earthquake in Haiti, a market fire in Nicaragua, a famine in Sub-Saharan Africa or a tsunami in South Asia, those who have the least usually stand to lose the most. In a matter of minutes, homes are swept away, businesses are reduced to rubble and dreams of a better life go up in smoke.

Microfinance is not emergency aid. However, it is well-positioned to be a source of support and stability to people who live in poverty after they endure a disaster. ACCION’s 23 partner microfinance institutions are firmly established in some of the world’s poorest communities and can quickly mobilize assistance to their combined 3.3 million clients when disaster strikes. And microfinance isn’t going away—sustainable by design, it provides a permanent stream of responsible financial tools.

Diversifying Microfinance Services to Meet a Variety of Needs

Increasingly, the microfinance institutions ACCION builds and supports can offer clients financial safety nets to help them deal with disasters in a diversity of ways—including with grants, microcredit, interest-earning savings accounts, insurance policies and remittances services. Following the January earthquake in Haiti, ACCION’s longtime partner microfinance organization, SOGESOL, quickly mobilized its staff to search for clients in affected areas. Walking the devastated streets of Port-au-Prince, Leogane, Petit-Goave and Jacmel, SOGESOL staff located each surviving client and helped them assess the damage to their home and business. Leveraging relationships with international partners like ACCION, SOGESOL was then able to issue grants to clients to facilitate the rebuilding process.

Microfinance has a role to play in helping people deal with calamity in other, subtler, ways as well. ACCION and other microfinance providers are pioneering the delivery of savings accounts to people who have never before had access to a safe, secure place to store their earnings.

To help bring savings accounts to millions more people, ACCION has initiated a sweeping new program, supported by a $5 million grant from the Bill and Melinda Gates Foundation, that will extend savings accounts to more than one million people in Latin America within the next five years.

We have also invested heavily in the emerging area of “micro”insurance. Offering health, life, crop and a variety of other types of insurance policies that start as low as $1 per month, microinsurance providers are proving that the poor are worth insuring, that they are capable clients and that the demand is there.

For our part, ACCION has invested millions in ParaLife, a microinsurance holding company that specializes in providing insurance policies to low-income and disabled people, and LeapFrog Investments, the world’s first microinsurance fund for companies that insure people living with HIV in Africa.

Over the last six years, ACCION has also studied the impact that remittances, or money transfer services, can have among the world’s poor in times of need. Remittances represent a significant amount of resources in poorer countries: In 2006 immigrants in the United States sent more than $300 billion to family members in Central and South America. Sending money via a microfinance institution allows recipients to leverage funds and take advantage of other financial products—such as savings accounts, home improvement loans, and microinsurance—that can serve as safety nets for the poor.

Out of the Ashes, a Better Business Grows

When particularly hard times hit, the world’s poor need all the assistance the local and global communities can raise. We at ACCION recognize the unique role that microfinance has to play and are committed to making sure people have a place to turn for responsible and reliable financial services when they need them most.

Thankfully, Eduarda’s story did not end with her and her family living in destitution. Financiera FAMA, ACCION’s partner microfinance institution in Nicaragua, was quick to step in after the market fire that destroyed her stand. They offered her an emergency microloan that she applied, along with her tenacity and ingenuity, to restore her business to profitability and move forward toward a better future.

Tags: From, Help, Microfinance, Rising, Services, Times, Trouble, Wreckage

Rising From the Wreckage: How Microfinance Services Help in Times of Trouble

Eduarda Rodriguez watched helplessly as her livelihood went up in an ominous tower of flames. She had been slowly building up her market stall business in this back corner of the Mercado Huembes in Managua, Nicaragua for over a decade. The vegetable stall, though humble, was the lifeline that supported Eduarda and her nine children. And, just like that, the fire reduced it to a bed of smoldering embers.

As we witnessed in Haiti this year, calamity often lurks just around the corner for the 2.7 billion people worldwide living on less than $2 a day. Whether victims of an earthquake in Haiti, a market fire in Nicaragua, a famine in Sub-Saharan Africa or a tsunami in South Asia, those who have the least usually stand to lose the most. In a matter of minutes, homes are swept away, businesses are reduced to rubble and dreams of a better life go up in smoke.

Microfinance is not emergency aid. However, it is well-positioned to be a source of support and stability to people who live in poverty after they endure a disaster. ACCION’s 23 partner microfinance institutions are firmly established in some of the world’s poorest communities and can quickly mobilize assistance to their combined 3.3 million clients when disaster strikes. And microfinance isn’t going away—sustainable by design, it provides a permanent stream of responsible financial tools.

Diversifying Microfinance Services to Meet a Variety of Needs

Increasingly, the microfinance institutions ACCION builds and supports can offer clients financial safety nets to help them deal with disasters in a diversity of ways—including with grants, microcredit, interest-earning savings accounts, insurance policies and remittances services. Following the January earthquake in Haiti, ACCION’s longtime partner microfinance organization, SOGESOL, quickly mobilized its staff to search for clients in affected areas. Walking the devastated streets of Port-au-Prince, Leogane, Petit-Goave and Jacmel, SOGESOL staff located each surviving client and helped them assess the damage to their home and business. Leveraging relationships with international partners like ACCION, SOGESOL was then able to issue grants to clients to facilitate the rebuilding process.

Microfinance has a role to play in helping people deal with calamity in other, subtler, ways as well. ACCION and other microfinance providers are pioneering the delivery of savings accounts to people who have never before had access to a safe, secure place to store their earnings.

To help bring savings accounts to millions more people, ACCION has initiated a sweeping new program, supported by a $5 million grant from the Bill and Melinda Gates Foundation, that will extend savings accounts to more than one million people in Latin America within the next five years.

We have also invested heavily in the emerging area of “micro”insurance. Offering health, life, crop and a variety of other types of insurance policies that start as low as $1 per month, microinsurance providers are proving that the poor are worth insuring, that they are capable clients and that the demand is there.

For our part, ACCION has invested millions in ParaLife, a microinsurance holding company that specializes in providing insurance policies to low-income and disabled people, and LeapFrog Investments, the world’s first microinsurance fund for companies that insure people living with HIV in Africa.

Over the last six years, ACCION has also studied the impact that remittances, or money transfer services, can have among the world’s poor in times of need. Remittances represent a significant amount of resources in poorer countries: In 2006 immigrants in the United States sent more than $300 billion to family members in Central and South America. Sending money via a microfinance institution allows recipients to leverage funds and take advantage of other financial products—such as savings accounts, home improvement loans, and microinsurance—that can serve as safety nets for the poor.

Out of the Ashes, a Better Business Grows

When particularly hard times hit, the world’s poor need all the assistance the local and global communities can raise. We at ACCION recognize the unique role that microfinance has to play and are committed to making sure people have a place to turn for responsible and reliable financial services when they need them most.

Thankfully, Eduarda’s story did not end with her and her family living in destitution. Financiera FAMA, ACCION’s partner microfinance institution in Nicaragua, was quick to step in after the market fire that destroyed her stand. They offered her an emergency microloan that she applied, along with her tenacity and ingenuity, to restore her business to profitability and move forward toward a better future.

Tags: From, Help, Microfinance, Rising, Services, Times, Trouble, Wreckage

Strategic Management in Microfinance – Strengthening Internal Controls

This is part of a series which document the Strategic Management Projects (SMPs) undertaken by the Center for Agriculture and Rural Development Mutually Reinforcing Institutions (CARD MRI), which has set this network apart from other development organizations and micro finance institutions in the Philippines.

AUSTRIA SMP: RISK MANAGEMENT AND INTERNAL CONTROL FOR GOOD GOVERNANCE

Ms. Marivic Austria, Internal Audit Director of CARD MRI, undertook a comprehensive assessment of CARD Bank’s risk management and internal control systems. Her strategic management project is a case study on facilitating change management – how CARD Bank, in particular, and CARD MRI, in general, adopted and adjusted their internal audit procedures to create the best work environment, protect company and client investments, and manage risks in all aspects of their operation.

The Challenge: How to Manage Threats that Could Severely Impact Bank Operations

For microfinance institutions, the risk of income loss — due to processing errors, inadequate information, non-compliance with loan policy, and excessive concentration of credit risk, counterfeit collateral and employee fraud — are major risk exposures. Through the years and at various stages of CARD Bank’s evolution, it faced all or some of these risks.

CARD Bank provides small loans to a large number of clients and consequently handles a large number of transactions. The sheer volume of transactions requires that risk be reduced both before disbursement – through client appraisal – as well as post-disbursement, through a regular and comprehensive portfolio tracking system.

Adopting effective control mechanisms relative to loan administration and management is beneficial to CARD Bank in terms of cost avoidance, to control lapses and weaknesses in loan administration, as well as in increasing financial income and preventing future losses. Equally important, portfolio control performs the preventive and feedback function in the larger internal control system, making it a critical aspect in the Bank’s microfinance operations. Tracking facilitates regular monitoring of both financial (credit and liquidity) as well as operational (transaction and fraud) risks while also giving a picture of the institution’s operational performance.

There was, therefore, an urgent need to assess the current status of CARD Bank‘s internal control systems for it to better manage and mitigate risks using managerial resources.

The Solution: Improvement of Internal Audit Procedures and Risk Management Systems

Internal auditing involves the utilization of a systematic methodology for analyzing business processes or organizational problems. The scope of internal auditing within an organization is broad and may involve the efficacy of operations, the reliability of financial reporting, deterring and investigating fraud, safeguarding assets, and compliance with laws and regulations. Austria’s strategic management project is significant in its attempt to comprehensively assess CARD Bank’s existing internal control and risk management systems. The SMP mapped out:

1. The CARD MRI Internal Audit Unit, its resources, systems and procedures. Significantly, the SMP measured the unit’s internal audit function using the Balanced Scorecard approach, which is a recognized best practice in the measurement of the internal audit function.

2. The CARD Bank’s business process and the concomitant components of its Internal Control System. The SMP, interestingly, mapped out the control system in relation to CARD Bank’s changing loan products, procedures and processes. The Bank’s evolution from 1986 through 2004, and the resulting changes in its operations and controls, were exhaustively analyzed by Austria, who has been part of CARD MRI’s Internal Audit Unit for more than a decade.

3. The lapses in CARD Bank’s loan administration, as well as the risk potential of the Bank’s changes in products and procedures. The SMP provided details on the frequency and magnitude of the lapses, mapped the risks, and pointed priorities for immediate action.

4. The strategy that CARD Bank considered to enable it to better manage risks and prevent further losses. The SMP strategy was delineated into two components, namely, loss control and loss prevention.

The Results: Positive Financial Indicators, Loss Control and Loss Prevention

The strategic management project was able to meet expectations in terms of financial and qualitative results. Basically, the target was quality loan portfolio and high repayment rate, but positive financial indicators were also expected from a well-laid out risk management and internal control system. The SMP Metrics analysis showed positive results for CARD Bank’s financial indicators. Specifically:

1. There was an increasing trend in membership, and with the setting up of new branches, membership increase was high at 7% in June 2006 compared to only 1% in January through June of the same year. There was another 10% increase in membership in December 2006.

2. Portfolio yield exhibited an increasing trend from January 2006, but slightly decreased in October 2006 due to the implementation of the single loan policy for new members. Portfolio at risk (PAR) was high compared to the microfinance standard of only 5%.

3. Operational Self Sufficiency (OSS) was high because the branch was able to save operating expenses. In the establishment of banking offices, operating costs are expected to decrease because standards for equipment, supplies and other materials were set up.

4. Financial Self Sufficiency was also more than 100%; commercial cost and inflation cost were added to operating expenses to get the adjusted operating expenses.

In terms of qualitative results, the strategic management project resulted to the institutionalization of the following measures:

1. To control losses —

-Installation of control system through MIS customization
-Setting-up of banking offices for a streamlined management of operation
-Enforcement of control process through the installation of incentives and monetary penalties (Individual Level)
-Incentive at the Branch level using Risk Adjusted Return on Capital (RAROC)

2. To prevent losses –

-Re-orientation of officers and staff
-Series of re-training for operations staff
-Joint review by senior and branch management and audit team
-Increased frequency of audit
-Improved audit ratings of branches
-Process reengineering (Pilot testing of loan disbursement through automated teller machines in Candelaria banking units and for individual clients in the Las Piñas Branch)

Clearly, Austria’s SMP provided the needed impetus for CARD Bank, as a member of the CARD MRI network, to maximize the use of internal audit towards strengthening its risk management and internal control systems. By illustrating its success in implementing appropriate controls or countermeasures to address the risks in its operations, CARD Bank could serve as a model for other microfinance institutions in the area of risk mitigation.

Along development processes, the SMP illustrates how CARD Bank pursued good governance in its adoption of measures to promote:

-participation;
-rule of law;
-transparency;
-responsiveness;
-consensus orientation;
-equity and inclusiveness;
-effectiveness and efficiency; and
-accountability.

These characteristics of good governance assure that corruption is minimized, and the views of minorities taken into account and that the voices of the most vulnerable in society are heard in decision making. These policies are consistent with CARD MRI’s aim of empowering the poorest of the poor, clearly illustrated by the fact that the members of CARD MRI are mostly rural women belonging to the economically and socially marginalized sectors.

Tags: Controls, Internal, Management, Microfinance, Strategic, Strengthening