Environmental Science I
September 18, 2012
For many years microloans have helped people out of poverty throughout the world. Unlike handouts, microloans must be paid back. These loans are very often paid back. There are pros and cons to the economy by having to pay the money back. Also, there are impacts on the environment.
Microloans are very small loans given to borrowers. Typically, these loans are given to the poor with the intention for them to find work and support themselves. Not only were microloans designed to reduce poverty, additionally it has given power to women. Microloans were developed to be set apart from original loans. Microcredit offers small loans with high interest rates that are needed to return the money. Communities are benefitted as well from micro lending. Instead off collecting taxes from everyone and giving a handout to the poor, these loans are required to be paid back and the tax money can be spared for other important issues.
Benefits from microloans help the poor, women, starting business, and education and health. Without the access to the financial services such as loans, savings accounts, fun transfers, and insurance, the obstacles to overcoming poverty can be nearly impossible. Most countries offer a microloan of 100$. This is all it takes to start a business and support a family. The key reason of how microloans are successful, is the requirement to repay the loan, and the size of the loan. The repayment rate of these microloans is above 97%. Handouts are often taken advantage of; spent on wants, instead of necessities. With knowing that the loan must be paid back, people spend the money on important things that will help them later on. If microloans are specifically given to the poor and meet cultural, economic, and legal environments, the poor can repay the loans. Some banks are specifically giving these types of loans to women. The benefit of targeting women...