Microloans are becoming more and more popular. It is good to understand the history behind microloans to have a better chance of obtaining them.
Why are microloans good for people with bad credit?
Microloans are considered alternative business financing (or an alternative for an SBA Loan). Microloans were specifically created for entrepreneurs and small business owners with bad credit, no credit, and/or a low income. Microloans are also good for people who need to elevate their financial position, people who are jobless and are looking for a way out of it and people who want to get a loan for various useful purposes but have nothing to offer up as collateral. These loans are given to individuals for various reasons; the main ones being those that are business related. Nowadays, microloans are available for purposes of community and economic development and women empowerment. In most cases, to get a microloan, being a woman is an added advantage.
The history of microloans
How did microloans come about you ask? Well, in the past, around the year 1976, a man thought to give some very poor but innovative and hardworking people a very small amount of money for their business and see how they would use it. The business owners received the money with the utmost zeal to the surprise of the man; so he waited to see if they would use it effectively. The workers went to collect dried papyrus reeds and clay and used the money to buy the small equipment they needed to practice weaving and pottery for their businesses.
By the time the workers had finished their first day of weaving and pottery, they had made chairs and pots, sold them and gotten back enough money to pay back the man. Now they could venture out on their own. From then on, microloans have continued to grow in popularity because they can really help some of these people alleviate themselves from their state of poverty. Soon, it was discovered that if a whole slum of poor people were able to obtain microloans and save themselves from dying of poverty and the poverty issue in the world would be on its way to eradication.