Some might believe that a successful business relies on a good foundation of creativity and ideas paired with a solid model that ensures profit. While this is certainly true, it all starts with the means to make what is essentially a thought or vision into a reality. This ultimately boils down to possessing the necessary money. It is an obstacle that many aspiring business owners have to overcome but seems impossible for those residing in developing nations.

To put it simply, individuals in poorer communities tend to be unbanked. Many lack access to conventional banking systems while some may not even possess the qualifications required to successfully get a much-needed loan. But not all is lost, and there is a way to get past this challenge and it comes in the form of microfinancing.

A Solution to Meeting the Financial Needs of Business

At its core, microfinancing is a means of providing small but nonetheless necessary loans at far more attractive rates, targeting those who want to start a business but lack the means to do so. According to financial specialist Sharone Perlstein, these microloans, while not sizeable amounts, can go a long way especially for those in developing nations since the cost of living is usually lower than in first world locations. To this end, the amount levels the playing field.

Rate of Repayment Results

Not many are familiar with the term, however, microfinancing is not an entirely new practice. The results data shown by the International Finance Corporation is staggering. Around 130 million individuals have already utilized microloan support to either begin their respective businesses or sustain them. But that isn’t even the most astonishing part. Based on Sharone’s website, the rate of repayment is almost at 99%. This proves how effective microfinancing has been and continues to be.

The Future of Microfinancing

Like any venture, microfinancing continues to evolve with the times. Advancements in technology have helped this evolution greatly in streamlining processes and putting newer and much more efficient ideas into practice. One good example of this is the relatively new technology in the mobile phone industry. Since manufacturers continue to develop newer and better models, prices for older variants keep on dropping, making accessibility a non-issue.

With all of the obstacles it has and continues to overcome as well as the multitude of possibilities that it has for economic growth and business sustainability, there is very little doubt that microfinancing will continue to be a force to be reckoned with. The excitement of experts such as Sharone speaks for itself. In fact, it is hardly surprising considering its overall potential to be beneficial to those who may have a good business plan but lack the resources to achieve it.