Giving Compass' Take:

• Microloans can help communities grow by fostering entrepreneurship, empowering women, reducing poverty, strengthening the local economy, and creating healthier communities. 

• How can microloans work to help refugee communities?

• Learn about how microloans empower small business owners in Rwanda. 

Most of the more than 40 million Americans living below the poverty line (defined as a family of four living on $25,100 or less), can’t access a conventional loan or life-changing capital. With microloans, entrepreneurs can receive small amounts of money—typically $500 to $50,000—at low-interest rates to grow their businesses, and in turn, improve their lives and that of their families, and contribute to the success of their communities.

Curious if microloans have an impact on your community? Here are five ways these small loans are making a big difference:

  1. Fostering entrepreneurship: Microloans provide entrepreneurs with money for the supplies, infrastructure, inventory, marketing, and more that they need to succeed. This means that even those without wealth, access, or privilege can turn a bright idea into a thriving, profitable business.
  2. Empowering women: Globally and in the United States, women still earn less, own less, and remain disproportionately vulnerable to poverty. Women are more likely to be excluded from the financial mainstream and are less likely to have a credit score or a bank account.
  3. Reducing poverty: Many people don’t have enough income to support their basic needs or the needs of their families. By equipping small businesses with capital, microloans enable them to grow and become profitable.
  4. Strengthening the local economy: Buying from small, locally-owned businesses is a great way to invest in your local economy. While only 14 percent of money from chain store purchases recirculates in the community, 48 percent of each purchase at local, independent businesses stays local.
  5. Creating healthier communities: Microloans enable businesses to succeed and generate income for entrepreneurs and their employees. With greater income comes a greater capacity to spend on health-related expenses, including preventative care.

Read the full article about microloans by Alethia Mendez at TriplePundit