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Payday Loans / MicroLoans in the USA and Europe

MicroLoans in the USA and Europe

In Europe and the USA, online microloan companies are gradually developing the microloan market. The decision-making time for granting a loan in Western countries can take several minutes. Oddly, payday loans there are also popular.

Small European and American banks on their websites are talking about how quickly they are ready to process and approve small loan applications. Usually, the decision to issue such loans is processed by an employee of the local branch, without waiting for permission from the head or regional office.

At the same time, as American statistics show, small banks are steadily losing their share in microcredit and small business lending. Either large banks or online lending institutions began to fill this niche.

For example, many different American website specializing in online loans claims that an applicant can receive an approve about the possibility of granting a loan in less than 7 minutes. Such payday loans websites provide financing for small businesses both in the US and the UK.

While traditional banking institutions may take several weeks to process loan applications because they must comply with the very strict requirements.

If the borrower needs money to buy inventory or equipment, he can be sure that the money will be sent to him within 2-3 banking days after a positive decision is made. The amount of the loan issued can range from $5,000 to $100,000 and can be provided for a period of 4 to 24 months.

The priority types of businesses for online lending include small restaurants and cafes, medical facilities (usually dental clinics), car repair shops, small shops, beauty salons and hairdressers.

Curiously, such facilities do not provide anything about specific effective interest on loans. It is easy to guess that the rates for such products are much higher than traditional bank lending rates of 6-7%.

It is especially noted that online companies do not provide loans to enterprises that are planning to start small business. To be eligible to be approved for a loan, a business must function normally for at least 4 months.

In the UK, about 2 million people regularly take short-term “payday” loans. In the USA, the turnover of the payday loans segment in 2010 amounted, according to international analysts, to about $40 billion. The average amount of such a loan is from $200 to $5,000. A loan is usually issued for a period of 3 days to 2 weeks. The interest rate on payday loans varies from 500 to 4500% per annum.