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What Is Micro Lending?

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Getting a loan can be difficult for anyone. With ever-stricter standards, it often seems that only those that do not need money can actually get it. It is a shame, then, that many individuals with wonderful ideas simply do not qualify for loans by dint of who they are. A new trend in financing, micro lending, seeks to break the traditional lending mold and to give those in typically un-lendable circumstances the chance to pursue their dreams. Whether or not the actual model will catch on or become a financially viable alternative to traditional banking practices is still far from clear, but it does represent an interesting new form of investing with a conscience.

Micro lending is a relatively new phenomenon. Rather than employing the traditional loaning scheme of requiring those that want a loan to basically not need one, most of these transactions are between lenders and those that would typically be classified as credit risks. Those from impoverished nations often benefit, as do those that would traditional represent greater risks to the banks. These loans are generally given in small amounts, and repayment is at a more relaxed pace than one would see from a typical institution. The point for most of these loans is to create a better overall global community through the process of attempting to give others a chance to pursue their own entrepreneurial dreams.

Does micro lending work?

It is, of course, simply too soon to tell. There have been success stories from the process, and it does represent a radically new way of doing business. In an age where credit seems to be at a premium and it seem harder than ever to realize a dream, this form of loan might be the wave of the future. Only time will tell if the goals behind the concept really succeed, but the spirit and business model do seem to be working very well so far.

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