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What is a microloan?
When it comes to paying for education, training, licensing and other related costs, skilled immigrants and refugees have limited options. You can either borrow money from a bank, apply for a grant and/or loan provided by the provincial and federal governments, or get a microloan. Some microloans require you to have a Canadian credit history, but others don't.
Microloans are small loans that don’t exceed $25,000 and are usually provided by non-profit organizations called microlenders. One example is Windmill Microlending. They typically require less documentation than banks. Depending on the lender, they provide competitive interest rates, and some are even interest-free. Microloans support those who may not otherwise qualify for credit products offered by larger financial institutions, for instance if you lack a credit history or don't have a a good credit score.
Since non-profits are community-focused organizations, their microloans are too. This type of loan helps build thriving communities by providing immigrants with the funds they need to have a successful career in Canada. In the case of newcomer microloan programs, once a loan is repaid, the money is used to assist other newcomers like you.
What are the benefits of microloans?
Microloans can offer more than just getting money through a loam. They offer you additional services to help you succeed.
Build your Canadian Credit History
Microloans are an excellent tool to make it easier for you to start building your credit history in Canada. If payments are made consistently, and on time, a microloan can help you improve your credit score, potentially giving you access to better interest rates on credit products in the future.
Guidance and Referrals
Microloans are offered by non-profit organizations that usually provide additional services to borrowers on their road to integration and are vital in setting individuals up for success. This may include providing guidance to draft a career success plan, referrals to other organizations for critical skills, or advice about financial literacy.
Microloans empower immigrants like you. Rather than a hand down, loans are a hand up because they aid you in your journey to achieve economic prosperity. Therefore, you can integrate into society and thrive more quickly.
Learn to Manage your Finances
Microloans can help you become financially responsible. Making your payments on time is a good indicator that you are on the right track. Understanding your expenses and income and creating and following a budget to avoid missing payments or defaulting on your loan can positively affect your credit standing. Act responsibly to prevent carrying a lot of debt, spend responsibly and get organized, and when in doubt, ask for help
What can a microloan help you pay for?
Microloans are typically used to finance education, training programs and courses. However, you can also take advantage of these types of loans to pay for:
- Fees for licensing and qualifying exams
- Credential’s assessments
- Short-term living allowance
- Relocation costs for employment
- Travel expenses to take courses or exams not available in the area you live
- Books, course materials and work and lab equipment
- Professional association fees
- Other costs related to continuing your career (laptop for online courses, the cost of childcare while pursuing studies etc.)
Besides offering microloans, non-profits provide additional benefits to encourage you to succeed. Some of this assistance comes in the form of coaching, financial literacy and mentorship.
Coaching - Experts offer assistance and guidance to help you achieve your professional goals. This includes employment-related and career support, as well as advice on topics such as budgeting.
Financial Literacy - Since understanding the Canadian financial system can be challenging for many newcomers, it is valuable to receive financial literacy information while building or rebuilding your credit. In this way, microlenders empower you to make the best financial decisions.
Mentorship - Helps equip you with the skills and tools required to find gainful employment in Canada that matches your experience and education. Mentors can assist mentees in navigating the Canadian labour market, discovering career paths, develop a strategy and plan for future career goals, create networking strategies, and identify strengths, skill gaps, and/or areas of improvement.
Presented by: Windmill Microlending
March 11, 2021