The New Entrepreneur:
It looks like US entrepreneurs are increasingly turning to microloans, particularly now, as banks tighten lending standards.
To be sure, microlending is a tiny, tiny piece of small business credit in the US. Microlenders tend to be small nonprofits, and all their loans combined probably wouldn’t be a blip on the portfolios of one of the big banks. That said, there’s some evidence that it’s a growing source of credit for some very small businesses locked out of the conventional credit market.
ACCION USA’s Laura Kozien said that the organization is seeing more borrowers with FICO scores between 650 and 750, which is good credit. “We’ve really noticed a lot of people who formerly would have qualified at a bank.” ACCION USA’s loan volume for June, July, and August was $1.45 million disbursed in 228 loans, compared to $1.2 million in 207 loans for the prior three months, so again, these are small amounts, but growing.
Demand for microloans in the US has jumped in the past year, according to Sara Ignas of the Association for Enterprise Opportunity, a trade group for microlenders and microenterprises.
The numbers are small but the trend is interesting.
Photo by on2wheelz.