We, Americans have a flair for really big things. We like big cars, aircrafts, burgers & sausages, apartments, refrigerators & ovens, Godzilla’s, Armageddon’s etc… But among other things we also have big credits and debts. Though much has been said about our gasoline-guzzler cars and large burgers, no discussion threw out plans to end our current credit crunches. Reversing our likeness from big entities to looking towards Micro Equity maybe an answer.
Micro Equity is a successful model in third world countries. But the very success of this model in under developed countries raises apprehensions of its success in a developed country such as the United States. In the United States, more than 37 million people live below the poverty line; approximately 74 percent of them are located in major metropolitan areas. A wide variety of social, historical, cultural, educational and structural factors contribute to the persistence of poverty in the world’s richest nation. A growing fiscal deficit curbs government spending in a big way. This calls for identification of target areas where micro finance can help.
Grameen Foundation, a successful micro model from Bangladesh has footsteps in the United States too. Their partner micro-finance institutions in United States are: The Plan Fund, Dallas, Texas and Project Enterprise, New York. Success stories emerging from micro equity loans are huge. Among them is Fred Deluca, the founder of Subway Restaurants, who began this billion-dollar business with a loan of $1,000 in 1965.
Since disbursing its first loan in 1997, Project Enterprise (PE) has made more than 400 loans totaling more than $800,000 and provided more than 1,400 low-income and minority entrepreneurs with business training. The PLAN Fund encourages local partnerships to secure the resources needed to reach growing numbers of low-income Dallas families. It has served more than 1,000 micro businesses, extending loans in amounts averaging $1,400 in addition to business training and networking opportunities. Such micro loan disbursing funds try to provide the same resources and contacts which are available to affluent classes.
Micro equity loans are advantageous for low income groups due to the fact that they are collateral- free. In new market realities, where the government spending is increasing with low returns, a larger section of the population is facing the gun. Taking an equity loan in such a scenario is risky. It is prudent to mitigate this risk by taking small loans target-based loans instead of collateral guarantee loans again homes or other real estate property.
Micro Equity is a financial instrument born in the under developed countries and has been tested over the years. It is a fundamentally strong equity model which American populace can gradually accept. It is a suitable alternative in these tumultuous times of recession. With Barack Obama coming to Presidency, there are definite hopes and people are looking up to economic matters advancement. In such a scenario, this option can also gain some good grounds
