For many, accepting an interest-free loan is the only acceptable option to establish or grow a small business - and for good reason. In exploitative “developed” countries, interest payments have put many in serious financial straits. Not only are they unable to make their payments on the loan amount itself, but the interest accrues at an alarming rate. Some former university students even end up paying out more than their original loan was for if they don’t take advantage of some debt-relief options available to them. Wanting to avoid these predatory situations altogether many would-be small business owners in developing countries are wary of traditional lenders and prefer to accept only small amounts that they then intend to pay back in a very short amount of time.
An interest-free loan to a small business owner in a developing country can mean the difference between surviving and thriving in their work and livelihood. It can mean the purchase of new equipment, extra stock, additional infrastructure, and other crucial and needed improvements that will ultimately grow the business tenfold over time. A meager investment of $500 in a small business in a developing country could result in dramatic results for that business owner, and in many cases, provide for an entire extended family, including elderly parents, grandparents, siblings, children, cousins, and other extended family members.
For single women especially, the gift of an interest free micro-loan can grant them the independence they need to survive in a male-dominated marketplace. It can seem insurmountable for women to compete in a market dominated by male earners and business men. For those widows, divorcees, and other single ladies the impact is further multiplied on entire communities because women (and mothers) are more likely to invest in their children – sending them to school and improving the family’s earning power and quality of life for generations to come.
For many, it is a moral imperative to help the less fortunate, and giving micro-loans is a great way to do that. Repayment in full on a microloan is usually at rates higher than traditional loans. Even if the borrower does default, which is unlikely, you’ll rest easier knowing that you are not out tons of cash and can count it as a charitable offering because the repayment funds were probably put to use in an unfathomable crisis situation for that family.