Microloans are an important and growing part of the American financial system. Micro lenders will extend microloans that typically range from $500 to $50,000 to people and businesses. Unlike traditional bank loans, which are typically for larger amounts, microloans are accessible to a much larger portion of the population. Micro lenders will approve a wide range of applicants, some of whom might not be able to secure loans from other institutions. The repayment term for a microloan usually lasts between one and three years and the interest rate in many cases are below ten percent. Microloans help many facets of the American economy and are an important tool for small businesses. Microloans don’t only supply financial assistance, they provide Americans with the opportunity to enhance their businesses and improve their quality of life.
Since their inception, Microloans have had a powerful effect on countries throughout the world. In many places, such as Africa and Asia, traditional lines of credit are not available to sizeable portions of the population. When these people are in need of a line of credit or cash to pay bills or start a business, they can turn to Micro lenders for assistance. By bridging the gap between those who have access to credit and those who do not, microloans help stabilize the global economy. Without microloans keeping small businesses healthy and making local economies stronger, the global economy would be much weaker than it is today.