Get your mind out of the gutter, oh gentle reader. We’re not talking about ladies of the evening. No, these ladies work far harder and often face much worse conditions than your average street walker.
We’re talking about women in small business. While it’s challenging enough in the United States to be a woman in small business, in some parts of the world it’s nearly impossible. In developing nations especially, women often have a hard time even getting a small personal loan to help jettison their small business idea.
Many banks and investment firms are more interested in larger corporations, or in businesspeople that already have a large amount of assets. They aren’t interested in making small loans to poor people in developing nations, no matter how good their business idea might be.
In some places around the world, women are denied even the most basic access to financial service altogether.
It’s this global environment that’s lead to the development of microfinance. Microfinance is, in the most basic sense, the supply of financial services, savings and loans to poor people. Microfinance usually involves small amounts, perhaps of just a few hundred dollars. The size of these loans, as well as the makeup of the borrowing population, make them different from traditional loans.
These loans are necessary because individuals in developing nations often don’t have access to traditional banks. They can’t go in and get a loan because they don’t have a credit report, they don’t have collateral and they may not even be able to fill out loan paperwork.
In many cases, these personal loans are relatively small. A woman in Malaysia might need $500 to get a gardening business started, or a woman in the Philippines might need $200 for materials to start a clothing business.
Microfinance personal loans gives a way for poor households to meet their basic needs. They add the stability of a business to a household that needs stability. They enable poor people with good ideas to make money on those ideas.
Websites like Kiva.org (http://www.kiva.org) and others are set up so as to allow people to make these kinds of personal loans. You can actually page through and choose a business you want to invest in, make the loan and watch to see what happens.
Microfinance personal loans aren’t charity, as the money is paid back. They are charitable, however, in that they help a struggling family or individual to help themselves.
Photo via egor.gribanov