January 5, 2022 0 Comments Business, Finance

How Microloans Will Change the Lending Industry for Good – Dan Schatt

Lending is an industry as old as commerce, and insiders like Cred co-founder Dan Schatt are revolutionizing how loans are made. However, it’s undeniable that modern lending is due for an upgrade, and companies like Cred and others are helping to lead the charge by bringing accountability to the lending industry.

Here are ten ways microloans will change the lending industry for good:

1) Microloans will increase access to capital for small businesses

Because microloans are smaller, they’re more accessible to small businesses that may not have the credit history or collateral to qualify for a traditional loan. This will help level the playing field and give small businesses a better chance of success.

2) Microloans will spur economic growth

Microloans provide much-needed capital to small businesses, which helps to stimulate the local economy. A study by the Grameen Foundation found that for every $1 lent out in microloans, $6 in new economic activity is generated.

3) Microloans will help to eradicate poverty

One of the biggest benefits of microlending is that it helps to eradicate poverty. When people are given a chance to earn an income, they are no longer limited by factors like hunger and homelessness.

4) Microloans will help to create jobs

Every loan generates at least three new jobs – one for the borrower, one for people involved in servicing the loan, and one additional job due to increased economic activity. By 2025, it’s estimated that the microlending industry will create 21 million new jobs.

5) Microloans will reduce CO2 emissions

Many people don’t realize this, but taking out a loan with a traditional financial institution creates approximately 1 ton of CO2 in the atmosphere. By comparison, a Cred borrower lowers CO2 emissions by 8 tons annually due to the reduced use of fossil fuels.

6) Microloans will help to build community

When people come together to support one another through microlending, it builds community and helps to create a sense of solidarity. This is especially important in marginalized communities that often feel left out or overlooked.

7) Microloans will increase financial literacy

Microloan programs typically include a mentoring system that provides borrowers with an opportunity to learn how to manage their money. This is especially important because the microlending industry is transparent about interest rates and other factors that can cause problems if not done responsibly.

8) Microloans will provide much-needed capital to women

Women are often marginalized regarding access to capital, but microloans can help to close that gap. Over 60% of microloan borrowers are women, and they are more likely than men to use the money for business purposes.

9) Microloans will help to build community resilience

When a community is resilient, it means that it can withstand and recover from shocks like natural disasters or economic downturns. Microlending can help build community resilience by providing a safety net for people who need it most.

10) Microloans will change the lending industry for good

Microloans are changing the lending industry because they’re more accessible, more accountable, and more beneficial to small businesses and the economy at large. This is good news for everyone involved in the lending process – borrowers, lenders, and society as a whole.