Everybody agrees that poverty is a big problem in today’s world. Around 1.1 billion people live in acute poverty and 8 million people die each year because of lack proper food and medical treatment due to shortage of money. In order to overcome this problem micro loans came into picture not only for the benefit of the US people but also globally.

The Small Business Administration (SBA) introduced the Microloan Program in 1992 to help and startup   small businesses. Microloan amounts may range from $1,000 to $35,000 and at times it is lesser, which depends on the maximum amount which will be used for the loan which is just the right amount for less capital-intensive home businesses. The average loan amount for this is $10,500. Other businesses that require more finance like building or land purchasing may find the amount offered by the Microloan Program too low and limited.  

 Micro loans are small loans of $35,000 or under for starting or establishing new small businesses. Micro loans when obtained through SBA-backed or other related programs  wants  the applicant to fulfill specific business training and planning necessary for the establishment of their business prior to applying for these types of loans. The SBA provides finances to non-profit community money lenders who can give the loans to business borrowers with the credit decision which are made locally.

The highest term of micro loans is 6 years which depends on each lender who have their own money lending and credit necessities. In spite of this, almost all the micro loans require some type of collateral and a personal guarantee of the business owner who wants to start the business. These loans have different categories for which the loan is given, like, inventory, supplies, furniture, fixtures, machinery, equipment, working capital etc.

These loans are comparatively easy to obtain than the traditional bank loans. If you are not located near the non-profit community money lenders then there may be a problem as they seem to dispense the funds received to their own communities. To succeed and achieve something in a business, you must start somewhere. Only will power does not give the businessperson money to buy his business needs.

Many of these micro loans are given to women who want to start their own small business because women are more likely to put their hard earned income to good use than their husbands, as they have more inclination towards the needs of the family. These loans usually start with a small amount. When the women starts showing success in the business with small loans, they have opportunity to expand their business with larger loans. When these loans are paid back with interest, these funds are given to others who need financial assistance.  

When people have a steady and secured source of income, they are able to fulfill their food and health needs. Their children can attend school and get better education which can help in building their career. Instead of living for the present day, families should plan and save for the future.