If you are like many people with an idea for a profitable business, you hit a brick wall when you try to get a small business loan from a bank. Perhaps you don't have a great credit score, or you haven't been able to establish any credit record at all. Maybe you don't have a lot of education or a business track record. You may not even have a bank account, much less a personal relationship with a banker.

It is a painful experience to be ignored or rejected, especially when you know you have a good idea and the motivation to make it work. Fortunately there is an alternative to bank lending that has emerged over the past decade in the United States: personal loan Microfinancing. Microfinance Institutions (also known as MFI's) provide small loans and other helpful services to businesses and individuals who find it difficult or impossible to get financing through traditional means. Originally limited to developing countries, there are now a number of these lenders in the United States and Mexico--and the trend is growing.

MFI's differ from banks in that they exist to help people who can't get funding through the usual financial institutions. They know that not being able to meet a bank's requirements doesn't mean you can't be successful. In addition to loans they often provide business counseling, advice, and ongoing support to help establish and grow your business. Each MFI operates a little differently and has its own policies regarding eligibility and the timing and method of repaying your loans. While they typically don't insist that you have a bank account, credit record, collateral or someone to guarantee your loan, they may require that you join a small group to receive training and counseling. Loans must be repaid according to agreed terms and schedules. Once your initial loan has been repaid, you may be able to get additional loans to grow your business. Loan amounts differ among MFI's but may range anywhere from $500 to as much as $100,000.

Some of the better known Microfinance Institutions in the United States include Grameen America and ACCION U.S.A., both of which operate nationally. There are also regional organizations such as The Opportunity Fund for those in California, and CASH (the Community Alliance for Self Help) in Seattle.

Another exciting development is the creation of non-profit groups formed to allow individuals to make donations which are pooled together to increase the funding available for micro-lending. One such organization is KIVA in San Francisco. Donors can search through descriptions of actual borrowers and businesses all over the world (including the U.S.) and make loans of as little as $25 to a specific individual. As the loan is repaid, the donor receives credits which can then be reinvested, donated, or cashed out.

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