Microloans Can Boost Loan Production Without Threatening Cap: Filene
A credit union helped a small-time baker grow from delivering home-baked goods to parties and weddings to placing Bundt cakes on regional grocery store chain shelves with a microloan of less than $50,000.
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The market is certainly ripe. Businesses with fewer than four employees made up 88% of all business in the U.S. in 2008, the latest period tracked by the U.S. Census. They employed 28.6 million people, or roughly 25% of all employees in the country.
Before making an entry into micro business lending, Grace suggested credit unions build their loan loss reserve funds and forge partnerships with providers of business development and technical services in order to ensure the success of the borrowers. Developing special underwriting criteria and training lender are also key elements.