Published On: Sun, Jan 22nd, 2017

The Ins and Outs of Microfinancing Your Small Business



Whether you’re starting a small business or your existing model is going through a bad spell, you’ll no doubt need some cash flow to get on track. Approaching lenders can be difficult and investors can be rigidly inflexible so can you finance a small business some other way?

Well, thanks to Muhammed Yunus’ pioneering work, you could look into the modern microfinancing market. From an outside perspective; it may appear that microfinance is the business equivalent to a short-term or PayDay loan but there’s a lot more to the concept than a small amount borrowed for a short time.

Microfinance is bluntly described as an array of financial services offered to small business owners who have no collateral or entrepreneurs who are financially insecure. The sums offered are usually less than £1,000 but they do offer the small business owner a lump sum of funds to get started, expand or get back on track.

For some, microfinance is a movement whose object is “a world in which as many poor and near-poor households as possible have permanent access to an appropriate range of high-quality financial services, including not just credit but also savings, insurance, and fund transfers.”

Naturally, they aren’t long-term solutions and generally must be repaid within six months to a year but the cash injection could give your business exactly what it needs to grow. If you consider starting up a gardening business for an example, in its fledgling stages; a microloan of around £1,000 will allow the owner to invest in some industry standard equipment or bring in an additional part-time staff member to extend the reach of the business.

Akin to PayDay loans, microfinance generally comes with a high-interest rate on repayments to ensure the lenders are earning from their generosity but, with a sensible approach to using the money, larger repayments over a short time could work out to be better than small repayments for an extended period.

There are roughly 7,000 microfinance institutions worldwide and looking at reviews of top business loan providers will help you to find the right lender for your business.

It doesn’t matter if you’re operating from an office, a spare bedroom or on the go – microfinance can give your small business the funds it needs to develop and become profitable in a very short space of time; you’d have to work very hard to generate funds by yourself and the larger banks will probably refuse you if you’re starting out or enduring a poor spell.

Why take the risk when Microfinance has been designed specifically to help you?


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