What Do You Need to Get a Payday Loan?

In the United States of America, there is a certain indefinite attitude towards online payday loans. Many people think that this is a good form of business financing, but some believe that it is created to serve the lower class.

This may be explained by the fact that microloan phenomenon has been officially originated in Bangladesh, where the founder of Grameen Bank, Muhammad Yunus, began issuing small loans to the rural poor some ten years ago. There was an alternative to moneylenders, support for small businesses, fight against poverty, empowerment of women, and as a result, entire communities were raised. In 2006, Muhammad Yunus awarded the Nobel Prize. As a result, his concept spread throughout the world.

The microloans in the US are available to small businesses that may not have sufficient credit score or may be owned by women or minorities – groups of the population that generally lack access to finance.

In fiscal 2016, the US administration provided 4,472 microloans to small businesses totaling over $ 60 million. About 40% of loans were issued to organizations owned by women and minorities. In addition, in 2016, over 40% of microloans were paid off, their terms lasted 2 years or less.

What is microloans in the USA?

Microloans are more targeted at people who have difficulty to be approved for a traditional bank credit. Microfinance institutions are generally more flexible than banks. If someone has a short or no credit history, then MFIs are more willing to consider other factors, such as business cash flow.

The limit on payday online loans in the United States is $50,000, and the average size of such a loan is about $13,000. Businesses can use this money to purchase the necessary inventory, supplies, furniture, machinery and other equipment. Microloans are issued for no more than 6 years and, as a rule, have rates below 10%. But when it comes to long-term loans, financing prices can become higher.

How to get a payday loan in the USA?

First of all, the organization must have a business plan. For those who may have difficulties with making it up, there are special small business development centers that can help in building a business plan.

Different microfinance institutions have different criteria for scoring their clients. Most often, they ask for the personal credit history of one of the business participants. Unlike banks, the assessment of credit score is more flexible, which makes it more likely to take a microloan.

If you are a person in reduced circumstances, you should follow such criteria to be approved for a payday online loan:

• be at least 18 years old;
• be a U.S. citizen;
• be employed and have a reliable source of income;
• have a checking account;
• have a valid email address and phone number.