Small Businesses and Microlending

A big breakthrough in tiny loans, By E. Scott Reckard, October 14, 2012, Los Angeles Times: “The Alameda Swap Meet in South Los Angeles is about the last place you’d expect to find a breakthrough in small-business lending. Filled with Spanish-speaking mom-and-pop vendors selling cowboy boots, videos, quinceañera dresses and fresh fish, the indoor bazaar tends to be long on cash sales and short on formal bookkeeping. But vendor David Manzo is building his business one swipe at a time. Every time a customer pays with a credit or debit card, a portion of that sale automatically goes to pay down a $5,775 loan to the Mexican immigrant, whose Mirna’s Market offers herbal remedies and religious items. The loan’s 12% interest rate is a fraction of what Manzo paid in the past for expansion and inventory loans. And he never worries about repayment. If business slows down, his installments drop automatically; when things pick back up, the higher sales mean the loan balance goes down faster…”