No, this idea is not how much of the world owes money to Microsoft. It's not how small the fine print on your credit card agreements is written, either. Microcredit is the extension of very small loans (microloans) to the unemployed, to poor entrepreneurs and to others living in poverty who are not considered bankable (ordinary lending institutions would not extend them credit). 1 The principle behind microcredit, which have been shown to work in third world countries before, show that even small loans can allow new businesses to form and increase an economy. Most applications have worked to create cash-based economies where none existed before, such as in African villages. The profits from the businesses created are used to repay the original loans with interest.
The reason I am writing about this idea, though, is not to discuss third-world applications. This week, Todd and I were discussing how the principles of microcredit could work in the United States. When he proposed it, my mind immediately started reeling with possibilities. The first suggestion he had was to implement microloans in my industry, trucking. By giving small loans to individual drivers, more owner-operators (drivers who own their own trucks) would enter the market which has shown a shortage for several years. I have been told by drivers over the years that the federal government helps foreign drivers buy their equipment (I have never researched the truth of their claims), but I see no reason such loans could not be extended to citizens. My business helps small trucking companies and individual drivers manage short-term cash flow crunches by paying them quickly, and we help them find more work to keep them busy. The existence of more such small trucking businesses helps my company be more profitable. More people have jobs, the economy grows, and so on down the line. The main point of microcredit is to eradicate poverty in the world, but there is no reason it could not work here in the U.S. While I love the financial opportunity available to creditors willing to take the risk of becoming involved in microcredit, I would love to see instead what might be achieved of welfare was used in a similar fashion. Welfare recipients could receive training in a field of interest, and upon leaving their training, they could have the opportunity to receive a microloan to start a business with their new training. I certainly hope to further explore these ideas in the future.
In researching the idea, I found several links that offer the opportunity to loan money or receive loans, which I am listing here. I would love to see more links related to U.S. loans.
http://www.microcreditnh.org/ - help with getting loans for business owners in New Hampshire
1. Quoted from Wikipedia
Note: this post was not as well researched as I'd hoped. We're finally starting to get better around here, but it's been a long week.