What is Lack of Collateral? There has been a difficulty that is common to all for a very long time. This problem is to confront the many available potential entrepreneurs who are seeking to get a loan and the lack of collateral that is said to be required by the banks. If it does happen that a loan has been offered, then the rates of interest that are demanded are really high. There are a few strategies here that will help you tackle these problems in a way that is easy for you.

The first and the foremost thing that you ought to be looking at are to alleviate the lack of collateral. The failure of the borrower to meet the collateral requirements of the bank may be for one simple reason that they do not have any asset that they can put forward as collateral. It may also start off as a problem when the borrowers of the bank do not have assets that have some amount of value that the bank will find difficult to accept. In any of the case the bank does have tended that they will reject those applications for loans that are not being accompanied by the collateral that they would have no problem in accepting.

There have been approaches of making sure that these issues of alleviating the lack of collateral are changed accordingly. They do vary from the no collateral strategies and go up till the government interventions. This is the level at which it does work.

The next thing we are to be discussing here is the no collateral approach that is the promotion of a group lending. In the recent few years it has been noticed that there has been a rethinking of the conventional methods of the practice in the banks in those circumstances where it is very evident that there has been a failure in the market.

The banking sector that is formal has been holding for a very long time the assumption that the risk of a loan is inversely related to the assets that the borrower does own. The past experiences of a couple of years have showed that there sure is a lack of the assets that the borrowers own. This however does not mean that there exists a risk of the default loans that are high.

There is also this group lending that is possible. There have been places that do have services for banking for all those people who cannot afford it. These types of services are found in Canada. These are also referred to as the micro credit banks. There are now more than a couple of them in the country of Canada. The mission of these banks is to provide loans to the real poor person that is the poorest of the poor in their country. The payments in this method can only be ensured if there is a group lending process.

There are also extensions of these possibilities to secure these loans. These are done by the use of the non movable assets such as collateral. What is Lack of Collateral?

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