Small Business Finance News

Survey: U.S. Microfinancing On The Rise

Written by Jenna Weiner
Published: 6/28/2010

Microfinancing is becoming an increasing force in the world of small business lending.

A new survey shows that entrepreneurs who can't get standard bank loans are turning to microfinancing lenders to get the loans they need to start or expand their businesses.

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The report by the Aspen Institute found that loan applications at microfinance lenders had risen by more than 60 percent over the just past two years. Sixty-eight percent of institutions also expected demand to continue to increase this year.

Experts told BusinessWeek that microfinance loans are aimed at small business owners who can't get a standard bank loan - good news for entrepreneurs who either don't have credit histories or have had some "hiccups" in the past.

The paper says that while the total amount lent by microlenders is a "drop in the bucket" compared to other sources of financing, getting one loan can also help give a business owner the credibility to get other investments.

Worldwide microfinancing lender Grameen bank - founded by Nobel Prize winner Muhammad Yunus - recently launched two new branches in Harlem and Brooklyn to give banking access to underserved residents and reduce dependency in check cashing businesses and unscrupulous lenders.

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