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As small business owners, entrepreneurs sometimes find them in a situation where needed cash is unavailable and bank requirements and processes are just too much for our situation. Fortunately, there are other sources of business funding that small businesses can tap into.

Micro lending has dispelled the notion that those on the lowest rungs of the income ladder are not able to follow basic rules of commerce. Rather, the poor have proved that they are as entrepreneurial as graduates of top business schools and fully capable of launching a business and earning profits.

Micro lending institutions are mushrooming in the different parts of the world, especially in Third World countries as it is the easiest way to start your own small business and it entails less hassle to the would be business owners. These organizations base their loans on your business’s ability to pay the amount back rather than on its credit rating. In many cases, microcredit programmes have been stand-alone operations. Non-governmental organizations and foreign donors have played an increasing role but they vary in quality and strength.

Financial accountability is an obvious criterion but how much weight do donors and investors attach to impact in terms of actual financial sources , and how do they define and measure this? The answers to these questions can help explain the relative strengths and weaknesses of different micro lenders.