Friday, March 13, 2009
The economic downturn has not only increased demand for emergency assistance and similar social services. The New York Times reports that nonprofit microlenders are stepping in to fill at least part of the credit gap created by the current financial crisis, with many small businesses and entrepreneurs turning to these sources as loans from regular banks dry up. According to nonprofit microlender executives quoted in the article, a significant part of the surge in inquiries are actually referrals from such banks. Congress has recognized this trend, more than doubling the size of the Small Business Administration's microloan program by increasing its funding from $20 million to $50 million in the new stimulus bill. That program makes its funds available to nonprofit lenders, which in turn can use it to make loans of up to $35,000 each to eligible borrowers.