With high speed and low-cost transactions, Blockchain is fast becoming the solution of choice for other financial enterprises, which manage financial assets. Cryptocurrency set the stage for lending institutions to use the digital ledger in emerging financial markets.
Innovative Blockchain-based technology may provide an avenue for inclusive financial solutions, opening up lending opportunities for businesses across the globe. Here are three ways Blockchain is improving access to loans for entrepreneurs.
Technology
As a lifeline for small businesses, microfinance solutions empower underprivileged entrepreneurs. However, high-interest rates and slow evaluation methods are drawbacks for the sector. Blockchain may transform the industry and provide transparency in a market plagued with distrust of microfinance institutions.
New technologies are opening doors for robust solutions, which provide essential services. Smart contracts are high-speed, secure, and transparent, driving financing providers to Blockchain to provide a robust infrastructure to emerging small business financial products and services.
Direct Access
The peer-to-peer capabilities of cryptocurrency are also transferable to other applications. Traditionally, lending includes a collaborative effort of agents, financial institutions, and intermediaries. The cost of processing a small business loan is high compared to traditional commercial loans.
By using efficient Blockchain technology, the need for intermediaries is eliminated, along with the high costs associated with each transaction. As a result, lenders have direct access to borrowers through innovative Blockchain infrastructure.
Efficiency
Blockchain also streamlines the lending process by creating a digital identity, eliminating the need for the agent to perform identity verification. Secure blockchain technology eases the process and provides a safe way to store consumer information.
These efficient transactions provide a safety net for lenders by ensuring borrowers are adequately vetted and money is transferred to the appropriate party.
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