Smart Business Solutions - Finance

What If You COULD Get That Bank Loan?

A new tool helps micro entrepreneurs overcome the biggest barrier to accessing capital from major financial institutions

Written by Megan Ip

Solopreneurs or founders of small businesses with very few employees can draw on informal micro-loans from a growing number of sources. It’s a good option if you only need $5,000 or so to get started. But it’s almost impossible for a micro entrepreneur to access a more substantial loan from a formal financial institution. Without a strong credit rating or collateral, most banks see these ventures as too risky to qualify for a loan.

TED Fellow Shivani Siroya seeks to change that perception by providing the data to show that many of these small ventures are, in fact, viable.

Her company, InVenture, has developed an SMS-based accounting tool called InSight that works on any mobile phone. Entrepreneurs can text in their business expenses daily and InVenture will send back a simplified income statement showing how much money they made that day and how much they spent, as well as a tally of their daily profit. This helps with budgeting and goal-setting, but it also gives them something formal to bring to a financial institution, explains Siroya in this short video. It creates what Siroya calls a financial identity.

The video is part of TED’s Fellows in the Field series, which bring together young filmmakers and innovative thinkers who are a part of its Fellows program. In the video, Siroya explains how her accounting tool works. “What I found was [the financial institutions] felt that these micro entrepreneurs or individuals transacting in cash were too risky,” says Siroya. “What I wanted to do was change that perception and be able to bring in real data to be able to show that these individuals are not risky, and that there is so much potential sitting there.”

Watch the full video here

Still not counting on that bank loan? Read one experienced bootstrapper’s advice for the bank-spurned

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