What is Microfinance and Why Is It Important?

Starting a business can be exciting for some, while for others it can be a stressful task. One aspect of business set up that’s difficult to many in the area of sourcing for funds. A good idea and plans that are not backed up with enough funds become only paperwork. Money forms the core of every business, it’s on it that other factors depend on. You need funds for business registration, business licenses, insurance, facilities, equipment, marketing collateral, and the hiring of needed manpower. You must save enough before coming up with a business plan. But what happens if the money you have available isn’t enough to handle all your business needs? Getting microcredit becomes a way out for many. There are many companies around that offer microcredit, but you must go through these credit companies reviews, before engaging their services. Ever wondered why getting microcredit is a good idea to start your business?

 

It helps boost the available funds

Not having enough has been one of the reasons many haven’t started anything. You might have the funds to handle the business registration but don’t have enough to buy the necessary types of equipment needed for the business. However, with microcredit, this might not be a challenge. Most renowned credit companies provide unparalleled services when it comes to a loan, but they are not accessible to low-income groups. Microcredit facilities like Vivaloan maintain their service is opened to all. If your business requires some workforce, then you have to plan for them too. You don’t expect your employees to wait until the business becomes big, before getting their pay. So microcredit can help you handle this challenge in your business.

 

No collateral required

Most credit facilities require collateral in the form of an asset to be presented by the borrower before the loan will be released. Financial bodies, such as banks, do not approve underprivileged customer’s loans, because they lack the needed collateral. However, this is not the same as microcredit. The reduced paperwork and hassle-free processing, make them a suitable option for business startups. However, since these companies don’t ask for collateral, access to larger funds is always difficult.

 

Short loans processing period

Your need for the funds might be urgent, so you wouldn’t want to be delayed with the processing. Unlike banks and other top financial institutions to go through some process before releasing their funds to you, microcredit doesn’t usually come with much processing. This is because of the small loan amount offered. The application process for most microcredit is extremely simplified; as some can be applied using your mobile devices.

 

Better loans repayment rates

The reason some persons shy away from applying for loans is the repayment rates. Some loans are given at a high-interest rate, especially when a large sum is involved. For startups, it important that the interest rate isn’t too high, this is because of the seen circumstances that might spring up. Microcredit are not designed to put stress on the borrower, as some companies even allow weekly or monthly installments.