Small and Medium Sized Businesses Stand to Gain the Most from Crypto Microfinance
With the restrictions and the reluctance witnessed with banks granting cash, it is not easy for small investors to set up their businesses. Having the best business plan drafted up for you is no longer enough to convince these institutions. This is where the microfinance that has been based on crypto technology is the overdue solution.
There Is a Lot of Business Within the Unbanked
There is a vast number of unbanked individuals within Africa; this is having levels of about 400 adults who lack access to adequate financial systems. When looking at the US, 8.5 million adults lack access to proper economic systems. Thus the use of Crypto has been considered to be the solution for many, as they have been given an option that they could save and exchange value.
However, the benefits that the decentralized system can bring the small business within the market are vast.
The SME’s within the market tend to face a lot of pressure; this is both those that are banked or unbanked. As they tend to incur more costs, this is in import taxes, goods, compliance costs, administrative and legal expenses. Thus, this leads to most small business to shut down even before they can challenge the incumbents.
The Solution to SMEs is Assetstream
The Assetstream has been established as a microfinance platform that assists the SMEs within the market. Especially those who have been excluded by the traditional finical systems to prosper. Thanin Piromward is the founder of the platform; he went on to tell Bitcoin.com that when most individuals hear unbanked, they only think of individuals within the developing countries.
However, this has become a big problem that also affects the business that are within these regions. As most small enterprises get denied access to loans and credit, which are vital if a company is to grow during the early stages.
‘’Crypto assets and the rise of social credit can remedy this lack of access through exposing SMEs to a community of lenders who are willing to assess each business on its merits, and assign capital accordingly.’’
The Microfinance that is Crypto Based
The number of crypto tools within the market is slowly increasing, and this is all thanks to the growth of the decentralized finance movement, defi. The defi being led by some of the big platforms in the community like the Dharma and Compound.
Several services have been, made available, like Sweetbridge, one that enables the businesses to easily tokenize their liquid assets, thus, being able to release the unrealized value that has been trapped within them. As a result, these can be used to obtain some additional finance.
There are also crypto lending services like Cred, one that can lend fiat for the crypto collateral, this in including BCH. However, if you are a small business that has not been able to acquire much to their name, there are still platforms that are offering finance. It is the likes of Assetstream and Moeda, as they can bring the counterparties together.
From here, the lenders see where their money is going, and the borrowers get to know the origin of their finance. And from this, the platforms have been able to increase ties and levels of transparency in the transactions and being able to offer the needed funding for the unbanked.