Sapa: Loans & Advances
We are still on our topic and will be delving into the whys, the dos and the don'ts. We will focus on loans. Advances are pretty straight forward because they are purpose specific and taken against an assured payment like salary, allowance, sales or profit.
Prior to this time, when an individual needs a loan he/she would approach a bank or finance institution. But, banks did not always adequately provide the credit needs of individuals and small businesses. Later, Microfinance banks and institutions came in to fill that void. Nowadays, one can get a loan from any number of loan apps from their mobile phone.
Now, although there has been an increase in credit providers, the economy hasn't improved which means MFIs still have high rates of default and loss on loan disbursements. Even in good economic and financial climates, people need credit to expand and fund businesses as well as attend to myriad responsibilities. A bad economy and financial climate makes it much worse. This is what fuels high default rates, bad loans and losses by MFIs.
