Are you tired of applying for seemingly unsuccessful loans? Have you applied for loans severally, and it appears as if you are never going to get them because of bad credit? Maybe you want to bring your dreams alive, but money seems to be a major hold back? Maybe you have approached a bank and you have been turned down because you have bad credit or you don’t have collateral to secure traditional finances. Worry not, microloans are for you.
What are microloans?
Microloans are small business loans that are issued to small businesses for startups. They are sometimes given to newly launched startups for working capital. In Canada, microloans can range from $5000 to $35000. Although, some lenders can go as far as giving $50000.
What are microloans used for?
Microloans are not for everyone, but if you are someone that has an entrepreneurial spirit and can convert a meager amount of money to something immense after a not to a long time, then microloans are for you. Micro loans can be used to start up businesses and business ideas. For new startups that need working capital, microloans are also for you.
- Microloans can also be issued to foster entrepreneurial development in communities and regions. In Canada, microloans are given through nonprofit organizations, child care centers, and other nongovernmental organizations. The funds will be channeled towards the cause of developing their communities and alleviating poverty.
- Microloans can also be for borrowers that applied for loans from banks but couldn’t get these funds due to bad credit or debts. It is easier to get microloans than business loans.
- Microloans are made accessible for a particular set of people. Sometimes, female entrepreneurs, immigrants and refugees.
What can I use microloans for?
Because microloans are not like every other loan, there are quite a number of things they are primarily designed for. A microloan can be used to start up a business, expand a business, use as working capital. But, don’t ever think of using a microloan to clear debts, it won’t turn out well. Microloans are not to pay existing debts or live a life of luxury. Microloans are ‘working loans’. Once you get them, put them to work.
What are the benefits of microloans?
- Microloans can be very beneficial as they are fast to access. They have an easy application process.
- Microloans come with a structured easy payback system. It could be in form of fixed monthly installment payment.
- Microloans are convenient and predictable. They are designed not to get entrepreneurs overheads in debt, so, they are patterned in a convenient and predictable form.
- Microloans can span through as long as full six years for borrowers to pay back.
- Microloans are not just about lending and borrowing, some of these loans come with development strategies and packages. Some microlenders pair their borrowers with mentors that will educate them on how to manage and expand their finances, while some organize business development classes.
Microloans are very beneficial and useful. Although, they have their disadvantages and setbacks, still, they are your go-to-funds, when you think business on a small scale and believe in small beginnings.