Pros and cons of using a microloan to finance your business

Have you ever heard of microloans and how they can benefit your business?

Online microloans in Kazakhstan have proven to be excellent for businesses that need small, quick loans that can help them move to the next step in their plan. Thanks to the possibility of receiving assistance from several investors for financing your needs, microlending is a great way to help your business overcome challenges or small expansion projects.

What is microcredit?

Microlending, or quick online loans, is where borrowers can seek money that comes directly from investors.

Microloans are very different from traditional loans because of who is funding the money. Instead of a banking institution lending money, the individual directly provides the funds to the person borrowing them. This can be compared to your friend or colleague lending you money, but they can set terms and fees associated with the return of their investment.

Microcredit not only changes the source of money, but also affects the entire lending process. Instead of a long and stressful approval process, you can get approval faster because you can contact the investor directly. Microloans allow you to make your case for why you need a loan and get instant approval.

Pros and cons of microloans

Microloans have many advantages and disadvantages.

pros

• One of the benefits of using microloans is their simplicity and ease of approval for your business. You can quickly get the cash you need for your business sooner than if you went to a bank or traditional lender, making the process less burdensome for you. Additionally, they will help you get a small amount of money if that's all you need.
• Another advantage of microloans is that they can be tailored to your needs. If you need more time to repay the loan or different terms, you can negotiate this with the investor, as opposed to a bank or lender.
• Microloans allow your business to establish good relationships with investors who believe in your mission and business as a whole. Instead of looking for loans here and there, you could constantly get help from investors and pay them back while your company is more successful.
• Another great feature microloans is that you can still get help even with a low credit score. This is why microloans are easier to secure for your business.

Cons

While there are many benefits to microloans, there are also some disadvantages that you should be aware of.

• One of the disadvantages of microloans is that they are smaller than traditional loans, so they will only work for your business if you don't need a lot of money.
• Another disadvantage of microloans is that because the money comes directly from investors, there may be fees associated with paying it back. If you have a low credit score or have taken out a larger microloan, some investors will charge you more to ensure their investment return. Luckily, the fees are listed at the beginning of the loan term to find out whether you can work with this investor or not.