Microcredit for Americans... ?

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We all know that microcredit is a small loan for the poor. It could be a lot smaller, but it could go up to $10,000. We all know that America is a wealthy country. So we suppose that microcredit is not really applicable to Americans. Right? Wrong.

Like many other developed countries, there is a hidden inequality among people in America. 45 million people in America are believed to be living below the poverty line. These people also need to access money, not necessarily at an incredibly high interest rate and without too much paper work.

Generally, however, banks and other forms of financial institutions in America avoid microcredit just because it is far too small to make any money. It does not justify the cost of originating and servicing such loans. Conveniently, microcredit in America is for up to $50,000. That is an enormously high loan amount in developing countries. That would be called a high end of small medium enterprise (SME) loans.

So many micro businesses in America are left on cold feet without many choices in financing their business activities but knocking on the doors of payday loans or pawn shop where the financing costs could be as high as 400% in annualized percentage rate or APR.

Grameen Bank of Bangladesh found this niche market in America. They establish Grameen America several years and has been expanding gradually but surely. It now has six branches, making loans with an average balance of $5,000. No credit, no collateral necessary.

One of the poorest countries in the world is doing a lending business in one of the wealthiest countries in the world. Sounds strange? But it is a reality.

New York Times wrote an article about this phenomenon under the same title: "Microcredit for Americans." I think it is worth reading it and you will find it of interest. I have put the link below. - Jeffrey

To read the entire article in the New York Times, click here.