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Finance expert Sharone Perlstein about the role of Microfinancing in the growth of new businesses

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Microfinance in the world

On a truly global level, but especially in developing regions, Microfinance is allowing creative people with limited financial means of their own to turn their business ideas into living realities. Microfinancing is therefore providing an excellent solution to the all-too-well-known problem of how someone who has an excellent idea for a business but lacks funding can act on that idea. In the past, such budding wealth creators often faced an insurmountable obstacle when they found themselves denied access to conventional business loans and lacked sufficient capital of their own. This problem affected not only these individuals and their families but also their entire communities, which were in these cases deprived of badly needed commercial growth and opportunity. This is where Microfinancing can step in and enable visions that would otherwise be lost to become thriving enterprises with widespread social and economic benefits.

How Microfinance underpins business creation

The stimulation and nurturing of more business enterprise in developing nations is urgent imperative in the world today. Quite simply, new business must be fostered in places that need it. The importance of engendering new business is the reason why Microfinancing has become such a pivotal concern. Do we understand the nature and functioning of Microfinancing, though? As a leading expert on the topic, Sharone Perlstein is an ideal guide to the world of Microfinance. Indeed, he is now at the forefront of a concerted effort to bring about greater levels of Microfinancing in Indonesia. We asked Mr Perlstein to lead us in a brief but insightful tour of this highly important approach to start-up fundraising.

Sharone perlsteinMicrofinancing and start-ups in developing countries

Would-be business founders who lack other sources of start-up funding can avail of microfinancing to get small loans at reasonable interest rates. These loans make it possible to cover all of the expenses that establishing a new enterprise entails. Naturally, the size of the loan offered in each case and the conditions attached to it will be determined in large measure by the location involved and by business conditions there. As Sharone Perlstein shrewdly observes, though, the smaller loan to which borrowers in more remote locations may be restricted will be offset by the considerably lower cost of doing business in such places.

Repayment percentages for microloans

Looking at this question from the lenders’ perspective, the welcome answer is that, compared to other sorts of widely available loans, microloans have an extremely high rate of full repayment. According to Sharone Perlstein’s own website, the percentage of microloans fully repaid is no less than 98.9%. In other words, available data confirms that Microfinance is highly effective and rewarding both for the start-up borrower and for the lender.

The evolving world of Microfinance

Our ever-changing technological environment naturally means that Microfinance is constantly adapting and improving in terms of both product range and quality of service. Among the changes taking place are additional services, including business insurance, that allow microlenders to support new enterprises even more thoroughly in their crucial early days. No wonder Sharone Perlstein’s enthusiasm for the fresh possibilities of Microfinance is so infectious. As we look ahead to see how the story unfolds, we have every reason to believe that Microfinance will be a key player in the emergence of new start-ups around the world.

 

37 COMMENTS

  1. This is very informative and well described. It’s easy to understand all the points being made about finance. I enjoyed it a lot and will share what I learned with all my friends.

     
  2. Organizations around the world are showing how microfinance methods can help lift poor people out of poverty. This article shows that understanding is not like some substance that gets transmitted from explanation to what is.
    @SharonePerlstein

     
  3. More people have access to the tools only bank would wield a few decades ago. I had hoped micro-financing would have had a bigger impact by now. This article shows its progress. I still believe the future of finance will soon become unlike anything of the past. My experience as a lender is similar to this article’s 99% repayment rate. Hope for the future.

     
  4. yes, microfinancing should play an important role in development…i will definitely agree and appreciate this.good work.

     
  5. Interesting article on Microfinancing . Sharone Perlstein brings up some very good points regarding
    all the possibilities that Microfinancing offers.

     
  6. Great article. The number of people in South Africa living on less than $1.25 a day is shocking. We buy beverages that cost more than 2 days of their income.

     
  7. Excellent article. Microfinance is a great strategy for developing nations. Since money is in short supply in these nations, microfinancing allows individuals to attain small loans with reasonable interest rates. This allows businesses to have lower operating costs.

     
  8. Microfinancing is definitely going to be growing in the near future. I’ll look forward to more information. Thanks for the article!

     
  9. Aw this is cool! Keep on helping the humanities. We are here on earth to do God’s work. We are workers of God and he channeled his wealth through people who can be entrusted in taking care of other people. Great work!

     
  10. Micro financing has been one such platform that has shown enormous success in the developing countries and is continuing to do so. Nice article.

     

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