Can't Get a Bank Loan? Try a Microlender

Credit is the grease in the machinery of small business. It’s how owners pay their employees and keep the lights on till receivables are received. But when a bank won’t give you a loan, what can you do? Many people these days are going to microlenders, reports the New York Times. Microlenders are typically nonprofit. They include the Small Business Administration and state and local government agencies. And your parents. Turns out sources like these are especially vital to an economy in recession, since many people who lose their jobs respond by starting small businesses -- which not only survive but prosper. After the 2001 recession such "microenterprises" (under five workers) created a million jobs. To learn more, check out the Association for Enterprise Opportunity, which advocates microenterprise development.

And you thought your credit card was bad. A lot of squeezed Americans are turning to payday lenders. Earnings at EzCorp, which operates 890 pawnshops and payday-loan outlets in the U.S. and Mexico, saw its earnings rise 18 percent in the first quarter. Not a bad payday for EzCorp -- and the many others in this line of business. Haven’t dropped by your local check casher lately? Interest rates there run around 900 percent for a one-week loan, 450 percent for a two-week loan and 200 percent for a one-month loan.

A Wale of an interest rate. It’s not a pound of flesh. But it is a lot of pounds. A loan shark in Wales was busted for charging borrowers up to 149,000 percent. And making loans to kids. The judge reprimanded him for "a wholesale and blatant disregard for the safeguards designed to protect the vulnerable." Sounds like the Bush administration.

Too small to fail. Now that there’s serious talk about nationalization of Detroit automakers. And now that the government already owns almost half of Citigroup and a whopping 80 percent of AIG (that’ll work out great), we started thinking: what about small business? If you’ve got big losses, maybe now is the time to call Sec. Geithner and hand over the keys. Good idea! So we searched Google for more info. Turns out Castro nationalized small businesses back in 1968 (which happens to be the model year of half the cars on Cuban roads). Cancel that call to Geithner.