micro merchant loans

Top 3 reasons why Microloans are a Panacea to Many Small Businesses

Small businesses create a sizeable number of jobs to economies around the world. In the United States, these businesses comprise two in every three net new jobs. Needless to mention the size of the population they absorb in every neighborhood.

Yet starting a small business and getting it off the ground remains a major challenge – not for any apparent reason but the mere fact that access to capital still faces quite some insurmountable difficulties.

From starting capital to working capital, small businesses struggle all the time to access funding. But that is quickly changing with the rise of a new breed of lenders in the market. Exactly why are these microloans so important to small businesses?

Banks are typically unwilling to administer microloans

Banks would rather extend credit services to larger businesses as opposed to their smallercounterparts. They have good reasons for this unwillingness to administer small loans. In most cases, the small business doesn’t have enough track record to show the bank. That’s one less-than-ideal credit profile. And as a business institution, the bank fears to lose to some bad credit situation.

Smaller loans are also outright uneconomical for the bank to administer. So while one could naturally want to blame the bank for disfavoring smaller businesses, it’s important to look at the profitability angle from the side of the lender.

It is fortunate however that there is a new cadre of lenders such as the First American Merchant(firstamericanmerchant.com) (FAM) that administers these micro merchant loans. If you are running or are planning to start a small business therefore, all you have to do is know where to look and prepare to meet the lending criteria set by these new lenders.

Micro-lenders often work with businesses that banks would not

Banks will not be willing to work with businesses such as restaurants,startups, and small merchants. These are considered high risk and banks would rather keep off them. Alternative lenders like FAM however help these high risk businesses get off the ground and sustain themselves monetarily.

Many micro-lenders additionally offer or recommend other services

Micro lenders don’t limit their services to the money they administer to the borrower. Other than making capital available to small businesses, they actually go further to recommend of offer additional services to help these merchants make the most out of the money they’ve borrowed and build healthy and strong businesses.

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