Micro Lending Software
One of the advantages of micro lending–providing small loans to individuals or small businesses at low interest rates–is that the loans provide not only assistance to the recipient, but often to the local economy as well. By supporting small businesses, banks have found they have helped increase employment and spending in the Oakland area.
It’s this reason that has led to a partnership between the city of Oakland, California and micro lender Kiva. The two would provide loans to Oakland small businesses up to $10,000 at 0 percent interest if a proposal is passed by the city council, making Oakland the first U.S. city to become a Trustee and to partner with Kiva.
“I used credit cards, then of course I racked up a lot of debt. It would be nice to be able to consolidate some of that debt and have a lower interest rate on them and be able to expand my labor force,” Loretta Nguyen, an Oakland business owner said to ABC, who would be able to benefit from this new program.
Oakland city councilmember Libby Schaaf also explained that this initiative would be a “revolving fund.” Once one business pays off its loan, another would be given the funds, further helping to improve the local economy.
While this partnership is still being decided upon, other cities can adapt this idea. With micro lending software, banks can provide small loans to businesses in the same way large loans are originated. By assisting small businesses, financial institutions can increase their customer base while also helping local economy.