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microfinance for londoners takes off

Micro finance is no longer just the preserve of developing countries such as India or Uganda; London is now one of the fastest growing markets for small loans for lower-income individuals. On May 9, 2011, Fair Finance, the first firm to offer micro finance to East Enders in London received 2 million pounds from two large UK banks to expand its lending  to reach even more lower-income Londoners. Faisal Rahman, the founder of Fair Finance says that although the interest rates charged on loans average about 53%, this is still much lower that what the payday loan sharks charged which could be anything from 1000% to 13000%.  ‘Fair Finance is a cheaper alternative to Loan sharks and payday loans as our clients do not have access to the conventional banking system’.

Fair finance’s mission is to help clients get away from loan sharks and predatory lending but ultimately to help these individuals find their way into the mainstream banking system. Its interesting however that the very same banks that say no to lending to these individuals are the same ones that are funding Fair Finance’s expansion? this is probably their way of offloading the lending risk to someone else and helps them look good in the process as they look like they are helping the local community…!!!

Categories: consumer loans
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