John Cookson, bigthink.com - Microfinance—a system of small loans and money services geared toward small businesses—has been heralded as a bold new financial frontier, opening up a wealth of opportunity to those otherwise unable to obtain a loan. This attention is not without good cause; microfinance groups provide a valuable service... 

by Jenny Marlar, Gallup WASHINGTON, D.C. — Residents in sub-Saharan African countries report a wide range of awareness about the availability of microfinance lending in their communities, suggesting these institutions remain locally inaccessible to many who would benefit most from using them. Malawians (65%) and Ugandans (63%) are the most likely... 

By Thomas Hart, Personalmoneystore.com - Microlending is on the rise as banks refuse to allow small business credit and small business lending bills go nowhere in Congress. Mt. T in D.C./Flickr photo.  Microloans are emerging as an answer to the small business credit crisis. Microloans are more commonly associated with  developing countries.... 

Microlending is on the rise as banks refuse to allow small business credit and small business lending bills go nowhere in Congress. Mt. T in D.C./Flickr photo. 

Microloans are emerging as an answer to the small business credit crisis. Microloans are more commonly associated with  developing countries. But microlending is on the rise in the U.S. as more small businesses are taking out microloans when the bank says no. Microlending could increase even more as a small business lending bill that would cut taxes and ease credit for small businesses stalled amid partisan feuding in the Senate.

Microlending: welcome to the third world, America

Microlending — making small loans, usually to the poor — has been one of the most effective means of financing growth in third world countries. But then the U.S. economy fell and can’t seem to get up. The New York Times reports that tight credit and the recession have increased the demand for smaller loans in the United States. Microlending is getting noticed and microloans are increasing in popularity. Kiva, which has lent more than $150 million in 53 countries, has started pilot program lending to business owners in the U.S. Grameen Bank — a microfinance group based in Bangladesh that was started by Muhammad Yunus, who won the Nobel Peace Prize for his groundbreaking work in microlending — has also widened its lending to Americans.

Small business lending bill fails

As microlenders take action to help small businesses, the U.S. Senate is sitting on its hands. Bloomberg reports that a bill addressing the lack of small business credit died July 29 when senate Democrats failed to get enough votes to consider the legislation. The bill would have provided $30 billion to banks with less than $10 billion in assets to encourage small businesses lenders. The cost of paying back those billions would decline for small business lenders as their level of lending rose. It was estimated that the small business lender package could prime $300 billion in lending. But Republicans wanted to tack extending the Bush tax cuts to the bill and said it would encourage more risky lending.

Microlending success stories

While the Senate dithers, microlending is scoring success stories. The New York Times article tells the story of a restaurant owner in Silicon Valley who saved her business with a $6,500 loan that she has three years to pay back and that carries a 6 percent interest rate. The Miami Herald reports that OUR MicroLending, a Miami-based lender, has made 764 microloans totaling $4.5 million. Its customers typically have fewer than five employees, with sales of $100,000 or less. OUR microloans range from $1,500 to $12,000 and average about $5,000. The average term is a year.

The Economic Times - BANGALORE: The Indian micro-finance industry (MFI) believes that the sector represents a good investment opportunity and capital adequacy will not be a constraint in the days ahead. This sense of optimism comes at a time when the Reserve Bank of India(RBI) has indicated that the capital adequacy ratio (CAR) for MFIs would be hiked... 

By Amaka Agwuegbo, Vanguard - The Lagos State chapter of the National Association of Microfinance Banks (NAMB) has said plans are on to group the state chapter by local governments so as to facilitate better communication and governing. Explaining the rationale for the grouping, Chairman of the state chapter, Chief Olutayo Adenekan, said the decision... 

Grants to Nonprofits Will Help up to 8,000 Businesses Obtain New Loans Over the Next 12 Months WASHINGTON–(EON: Enhanced Online News)–Bank of America today announced it will provide $10 million in grants to nonprofit lenders, such as Community Development Financial Institutions (CDFIs), to leverage funds... 

WASHINGTON–(EON: Enhanced Online News)–Bank of America today announced it will provide $10 million in grants to nonprofit lenders, such as Community Development Financial Institutions (CDFIs), to leverage funds from the U.S. Small Business Administration (SBA) and the U.S. Department of Agriculture (USDA) for lending to small and rural businesses. The grants, for use as loan loss reserves, may unlock as much as $100 million in low-cost, long-term capital for small business microloans nationwide over the next 12 months.

SBA and USDA microloans are made through local nonprofit lenders, which also provide business training and technical assistance. To access the capital, nonprofit lenders participating in these federal loan programs must set aside loan loss reserves at levels of up to 15 percent of the capital provided by the agencies. However, due to the economic recession, most of these lenders have been unable to meet the reserve requirements, limiting their access to loan capital at a time when small businesses most need this support.

Bank of America’s new microloan reserve grants were created specifically to help CDFIs and other nonprofit lenders meet the required reserve levels, and thereby access millions of dollars in new low-cost capital.

“Helping strengthen small businesses and new start-up companies stimulates job creation and is critical to our nation’s economic recovery. Bank of America is empowering these entrepreneurs by directing private sector capital to unlock exponentially greater amounts of federal dollars for their businesses,” said David Darnell, president of Global Commercial Banking, Bank of America. “Even the smallest grant enables a CDFI to leverage as much as ten times that amount to lend to small businesses, which helps initiate a ripple effect impacting job growth, spending and overall economic expansion.”

Darnell made the announcement today at the National Urban League’s centennial conference in Washington D.C. According to the SBA, the country’s 30 million small and micro-businesses are the chief generator of new jobs, creating two out of every three new jobs across the country.

“The National Urban League commends Bank of America for the development of this innovative program,” said Marc H. Morial, president and chief executive officer, National Urban League. “Allowing CDFIs and other nonprofits – many of whom receive management and technical assistance through our Entrepreneurship Centers – to provide much-needed microloans to small and minority businesses nationwide will lead to increased business growth and job creation, which will boost the economy of our country.”

The average SBA microloan size is $13,000 per business. Through these programs, CDFIs can borrow for 10 to 20 years at rates less than two percent – twice as long and half the cost of other CDFI lending programs currently available. There are currently more than 175 nonprofit lenders participating in these programs.

Bank of America is the nation’s largest investor into CDFIs, with more than $1 billion in loans and investments to 120 CDFIs in 37 states. This work with CDFIs is part of the company’s broad support for small businesses, which includes a pledge to increase lending to small and medium-sized businesses by $5 billion in 2010. In the first half of 2010, Bank of America has provided $45.4 billion to small and medium-sized companies.

Bank of America also is increasing its spending with small, medium-sized and diverse businesses through a pledge to purchase $10 billion in products and services from those suppliers over the next five years. Other efforts to help small businesses include recent improvements to the bank’s 2 million small business credit card accounts, such as no rate increases on existing balances, and enhancements to the Advisor Alliance™ retirement plan platform, which serves more than 900,000 people from more than 40,000 businesses.

Bank of America

Bank of America is one of the world’s largest financial institutions, serving individual consumers, small- and middle-market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk management products and services. The company provides unmatched convenience in the United States, serving approximately 57 million consumer and small business relationships with 5,900 retail banking offices, more than 18,000 ATMs and award-winning online banking with 29 million active users. Bank of America is among the world’s leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes, serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to approximately 4 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients through operations in more than 40 countries. Bank of America Corporation stock (NYSE: BAC) is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange.

www.bankofamerica.com

The TSPI Development Corporation received recognition as the most active Medium-to-Large Microfinance Institution (MFI) under the Microfinance Wholesale Program category during the 2010 Bank Excellence Awards given by the Small Business Corporation (SBC). Also feted as the Most Active Micro, Small and Medium Enterprise (MSME)-oriented rural banks are... 

By Johnstone Ole Turana, Business Daily Africa - CIC Insurance Ltd managing director, Nelson Kuria: Micro-insurance is a low-premium, high-volume business. The recent changes requiring insurers to separate life from general business and new capital rules are likely to scuttle the growth of micro-insurance, players have said. They said the... 

Nigerian Observer Online - ABUJA- The National Association of Microfinance Bank (NAMB) has called for good advocacy and protection for micro-credit institutions in the country. NAMB President Matthias Omeh made the call in an interview with newsmen in Abuja on the sidelines of a meeting of zonal and state chairmen of the association. He said there... 

WATERLOO, ON, July 28 /CNW/ – Sarona Asset Management announced today that its Sarona Risk Capital Fund has committed up to US$3,300,000 as an anchor investor in the MicroVest Short Duration Fund, the first North-American based microfinance liquidity fund available to private investors. Sarona also approved an investment in MFX Solutions LLC,...