What is a Microloan?
The whole concept of microloan is focused around small businesses. Usually microloans are mostly given to small businesses and poor citizens in developing countries as it can be hard to convince banks and investors to provide loans and invest when the business is new and small. This is why microloans were made by lenders especially for small businesses, for people who are stepping into the corporate world and for the poor citizens. This concept therefore, is also known as micro lending. These loans are more than helpful in covering the startup costs as well as the basic costs initially.
How Does Micro Lending Work?
The goal is to provide opportunities to more people belonging to poverty so they have a real shot at doing something or starting something themselves. The goal is to slowly eliminate poverty one person at a time. Micro or small loans are given at reasonable rates to people who want to start something of their own and grow forward. These loans at the time will be invested into starting up a business, and then the loan costs will be covered up by revenue generated from the same business. It’s a give and take concept.