New York Times Article on the Role of Microlenders in the Recession
Thursday, March 12, 2009
As the recession deepens, more and more small businesses are finding it harder to get access to lines of credit and loans in order to sustain and grow their business. As a result, according to a recent NY Times article, microlenders like The Capital Good Fund are seeing a dramatic uptick in the amount of applications they are receiving. Traditionally, microlenders have focused on low and moderate income individuals who would otherwise be unable to access capital from mainstream financial institutions due to poor credit history or other barriers. However, the recession is driving successful, established businesses to microlenders as well—for the simple reason that they cannot get loans elsewhere.
Fortunately for these small businesses—and for the microlenders themselves—“Federal lawmakers added substantial new financing for microloans to the economic stimulus package approved last month. They allocated $30 million to the Small Business Administration’s microloan program, which will be added to the agency’s existing $20 million earmarked for microloans.” One of the interesting results of a recession is that more people become entrepreneurial in order to make ends meet; thus in addition to seeing more applications from existing businesses, microlenders are also experiencing an increase in applications from low and moderate income entrepreneurs.
