> It probably goes without saying that the loans would have a higher interest rate
I remember in the '90s all the fuss about "microcredit" in developing countries. Maybe it's time to have something like that in "developed" countries too?
I hate to go true scotsman, but I think the term microcredit in many of those scenarios has been diluted beyond recognition. The guy who dropped dead in your second source, had borrowed a fifth of the cost of building a house - that's not really microcredit by any real standard: it's not small and it's not really a productive investment. The rates and methods mentioned (weekly 10% repayments!) are usurious, and usury can be micro or macro but it's still usury, not credit.
The original microcredit vision was low rates, in strong collective settings, as an investment to support productive endeavours: giving people enough money to start a business, or supporting them in emergencies so that their situation wouldn't dramatically change (fix a broken car so you can keep working etc etc). It shouldn't be a way to support consumption. It's hard not to inject moralism in the process, but there must be criteria.
Anyway, even if we're specifically talking about micro-enterprise, there is a high rate of failure and then people having the loan as millstones around their necks, and there's questions about how good it really is to have a bunch of businesses of the sort that are financed by microcredit: https://governancexborders.com/2013/05/29/the-art-of-pointle...
I remember in the '90s all the fuss about "microcredit" in developing countries. Maybe it's time to have something like that in "developed" countries too?