In the world of business and finance, it is normal for most entrepreneurs to approach banks to sanction loans for their business activities. Unfortunately, for people who live below the poverty line and have very few possessions, the same financial institutions may be reluctant to extend the same facility. This is because the officials of such establishments may consider these individuals to having a poor credit history or ratings. However, many microfinance organizations around the world are taking the initiative to improve the financial situation of those falling under the category of very income group. They are going out of their way to provide fundamental financial services in the form of savings, insurance, credit facilities and loans to less fortunate individuals so that they can become economically self-sufficient.
Making a difference in the lives of poor people
Joe Johnson Mercy Foundation is a leading non-profit organization in America that works collaboration with other charitable institutions to improve the financial condition of people living in poverty. To achieve this objective the personnel of this establishment offer financial assistance in the form of micro-finance loans to less fortunate individuals so they can become self-sufficient. In sharp contrast to other similar charitable establishments, this Foundation does not raise the necessary monetary resource through public donations. On the other, it gets the necessary money for the sale of commercial property that corporate organization cannot utilize effectively to generate adequate cash flow revenue. The officials of such companies are aware that they would liable to pay huge capital tax if they dispose of such real estate in the normal course of their business. However, when they sell such land and building to the Foundation at the price that is lower than the fair market value of the property, they can claim the difference as a tax deduction.
The managerial personnel of this prominent charitable institute explain that microfinance loans act as a catalyst in alleviating poverty. The advantages of extending such credit facilities to such individuals are as follows:
- Provide access to monetary resources: Banks refuse to provide credit facilities to people living below the poverty line because they have very little assets offer as collateral to the officials of such financial institutes. However, microfinance organizations offer such individuals money in the form of loans to start their own business or livelihood. This enables them to breakout the vicious cycle of poverty.
- Promotes self-sufficiency and entrepreneurship: In many case, people who live below the poverty line may be enterprising individuals but lack the necessary resources start their own business. Microfinance loads gives them the necessary monetary resources they need to turn their plans into reality and generate necessary revenue.
- Empower the female section of the population: Today, many women in developed and developing countries are taking the initiative to participate in financial and economic activities. The loans they receive from microfinance institution go a long way in helping these individuals start their entrepreneurial ventures. This goes a long way in encouraging gender equality.
The personnel of Joe Johnson Mercy Foundation further explain the loan facilities that microfinance institutions offer less fortunate go a long way in providing them with financial stability they need.