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Why can't Micro Loans work??

Iwrite, Have you ever worked with the SBA?? I have in N Y

The Microloan Program provides very small loans to start-up, newly
established, or growing small business concerns. Under this program,
SBA makes funds available to nonprofit community based lenders
(intermediaries) which, in turn, make loans to eligible borrowers in
amounts up to a maximum of $35,000. The average loan size is about
$13,000. Applications are submitted to the local intermediary and all
credit decisions are made on the local level.

At first glance, the goal of microlending is exciting and innovative: By making small loans to help impoverished people start small businesses, microlenders appear to turn those who are marginalized by mainstream banks into successful entrepreneurs.

Like any other development strategy, microlending for the purpose of
developing small businesses is a complicated endeavor that requires a
localized understanding of the particular economic, cultural, and
social factors affecting entrepreneurial success.

Microfinance, when defined as a one-time infusion of capital to a
start-up business which results in a profit for the microlender, is too
good to be true.

In other words. Micro Lending is out there. The amounts are small and the number of loans approved is even smaller.

LUCKIEST

As with any money lending venture...it's all about being paid back...not doing anything good by loaning money.

I went to apply yesterday. And the first thing to come up was we don`t work with people in real-estate. So go away. On the other hand if you want to throw away money on another failed resturant were in for that. Knowing resturants have the highest failure rate of any buisness. They should stick to buying pots and pans for some little old lady cooking to feed orphan`s in an impoverished country. In this country the local and state regulations will eat you up. The poor man hasn`t got a chance anymore in this country. I think the republican`s made sure of that.

One of the largest Micro-lenders in this country is ACCION USA - who has recently teamed up with Kiva. ACCION USA provides start-up loans up to $30K and loans to established businesses up to $50K. ACCION USA does not cover every state but has partners that it works with in these other states.

One of the issues with Micro-Lending is that they are also required to provide the business owner with business training. I think this stops a lot of borrowers who just want the money and not willing to take the time to do the training.

Also, most micro-lenders are non-profits and rely on dontations for their funds (for their operations and their loans). I think this holds back many of these organziations here in the US.

What I would like to see is banks (traditional banks) start mimicing these micro-lenders. Provide small loans and work with the borrower. Once the borrower pays that loan back - work on another (higher amount loan). This will truely make banking and small businesses into a long-term partnership.

By the way - I talk about micro-loans all the time here.

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