Access to credit is a term that is popping up more and more according to google. NGOs and religious leaders widely decry the lack of access to credit for the poor. The problem is, they mean access to bank credit, at usury. Their work to "help out" actually destroys. And they think their grants from Bank of America and the Agency for International Development are proof of the essential goodness of both.
Access to credit is important, but what are you calling credit?
If credit is based on money, that is someone with assets backing currency (extremely rare these days) then they lend you money, and it is noted on your tally. The money is yours, you must pay it back. There is enough of this out there to support any business at any level, as long as it is not interest-bearing.
Now another source is when someone has assets and acts as surety for the small business. They promise to pay if the person to whom they are extending credit fails to pay. Again, enough people in this work to meet the needs of business.
But the vast majority of borrowers and lenders are working in a false economy: banks lending credit when they have no assets to back the loan. And then they charge interest on nothing. And if the borrower fails to repay, the lender takes real assets away from the borrower.
Note that: in the first two the lender is at risk. The lender actually loses something if the borrower cannot repay.
In the third one, the vast majority of "credit" which the do-gooders lament is not available sufficiently, if the borrower cannot pay, the borrower loses something else the borrower owns, therefore the borrower is worse off than before! The bank never loses for it never put anything up. Their offer is heads we win, tails you lose. This is what the religious and NGO groups urge on their victims?
There is no shortage of credit. If someone claims they need access to credit, the problem is a lack of customers. If you have customers, the credit is there, necessary and sufficient. EZ Credit at a high price and long terms can provide a hit, like a hit of crack, but it is not a good idea.
The religious groups and NGOs need to review their call to the provision of despoilment to small businesses and the poor.
Feel free to forward this by email to three of your friends.
Access to credit is important, but what are you calling credit?
If credit is based on money, that is someone with assets backing currency (extremely rare these days) then they lend you money, and it is noted on your tally. The money is yours, you must pay it back. There is enough of this out there to support any business at any level, as long as it is not interest-bearing.
Now another source is when someone has assets and acts as surety for the small business. They promise to pay if the person to whom they are extending credit fails to pay. Again, enough people in this work to meet the needs of business.
But the vast majority of borrowers and lenders are working in a false economy: banks lending credit when they have no assets to back the loan. And then they charge interest on nothing. And if the borrower fails to repay, the lender takes real assets away from the borrower.
Note that: in the first two the lender is at risk. The lender actually loses something if the borrower cannot repay.
In the third one, the vast majority of "credit" which the do-gooders lament is not available sufficiently, if the borrower cannot pay, the borrower loses something else the borrower owns, therefore the borrower is worse off than before! The bank never loses for it never put anything up. Their offer is heads we win, tails you lose. This is what the religious and NGO groups urge on their victims?
There is no shortage of credit. If someone claims they need access to credit, the problem is a lack of customers. If you have customers, the credit is there, necessary and sufficient. EZ Credit at a high price and long terms can provide a hit, like a hit of crack, but it is not a good idea.
The religious groups and NGOs need to review their call to the provision of despoilment to small businesses and the poor.
Feel free to forward this by email to three of your friends.
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