Events & Promotions
|
|
GMAT Club Daily Prep
Thank you for using the timer - this advanced tool can estimate your performance and suggest more practice questions. We have subscribed you to Daily Prep Questions via email.
Customized
for You
Track
Your Progress
Practice
Pays
Not interested in getting valuable practice questions and articles delivered to your email? No problem, unsubscribe here.
Aug 2710:00 AM EDT
-11:00 AM EDT
We’ve worked incredibly hard to build TTP into the best test prep experience possible, and it would mean a lot to us to win Newsweek’s 2026 Readers’ Choice Award for Best Test Prep. If TTP has helped you, we’d be incredibly grateful for your vote.
Sep 0201:00 PM EDT
-11:59 PM EDT
Take 30% off all study plans with code COURSEWORK - Expires on Monday 9/7
Sep 0410:00 AM PDT
-11:00 AM PDT
What does test anxiety really look like on the GMAT? For many test takers, it does not look like a panic attack. Instead, it shows up as brain fog, rereading, negative comparisons, mental noise....
Sep 0609:30 AM EDT
-12:30 PM EST
Top scores are possible when you enroll in a powerful EA course, taught live online + 6 months access to TTP OnDemand video courses included! Perfect class schedule and easy course access for working professionals. Class starts Sundays Sept. 6, 2026.- Sep 07
12:01 AM PDT
-11:59 PM PDT
On the 7th, GMAT Club Tests will be Free! Including all the Quizzes, Questions, and Tests. 12 AM - 11:59 PM PDT - Sep 09
07:00 AM PDT
-10:00 AM PDT
Meet AdComs and explore top Master’s programs - MiM, MiF, MSc, MSBA and more. - Application Fee Waivers - Free 1-Week of GMAT Club Tests: - Master's Application Toolkit - Grand Prize Giveaway 
Sep 1507:00 PM EDT
-09:00 PM EST
Elite scores are possible when you enroll in a powerful GMAT course, taught live online + 6 months access to TTP OnDemand video courses included! Class starts Tues/Thurs Sept. 15, 2026 - Nov. 15, 2027, 7:00pm-9:00pm EST
Sep 2108:00 PM EDT
-10:00 PM EDT
Boost your GMAT score in less than one month in a live online class + 6 months access to TTP OnDemand video courses included! Class starts Mon, Tues, Wed, Thur, Fri Sept. 21, 2026 - Oct. 9, 2027, 7:00pm-10:00pm EST
Microlending as a form of foreign aid first became popular in the 1970s as a way to bypass bureaucracy and administration costs that frequently, though unintentionally, prevented money from reaching individuals and families in struggling countries. In contrast to traditional lending, which tenders large sums to lendees who have strong credit histories and steady employment, microloans are generally made for less than $1,000 and are available without collateral to individuals with questionable credit histories who may or may not be employed. The central qualification for approving a microloan recipient is that the individual have a clearly defined plan for a small business, whether that be a bakery, dairy, tailor shop, or retail store. Recipients are bound to use profits from their business to repay the loan, and lenders since the inception of microloan programs have reported surprisingly high returns on their investment: up to 96% of microloans are repaid on time.
Though there are several administrative options for microloan programs, one of the earliest has remained the most common. According to this approach, a branch of an established bank or a bank specially formed to issue microloans will locate in an area of need and begin issuing loans to local entrepreneurs. In the early years of microloan programs, banks frequently set up village committees, composed of financial advisors and bank staff, to host weekly progress meetings. This proved a difficult administrative strategy to maintain, however, when villagers began to default on their loans just to avoid the meetings and what they often perceived as interference in their businesses. Though most banks quickly revised this approach when they realized its negative potential, the trust vacuum created when they could not offer a return to investors led many banks to seek other forms of administration.
Which of the following best states the difference in borrower qualifications for traditional loans and microloans as described in the passage?
A. Traditional loans are issued only to large firms with documented profits, whereas microloans go exclusively to sole proprietors who have never run a business before.
B. Traditional lenders require applicants to have strong credit histories and steady employment, whereas micro-lenders focus on borrowers who present a clear plan for a small business regardless of credit or current job status.
C. Applicants for traditional loans must pledge collateral, while applicants for microloans avoid collateral by agreeing to weekly progress meetings with bank staff.
D. Traditional lenders screen candidates chiefly on the projected social impact of their ventures, whereas micro-lenders screen them on expected financial returns.
E. Borrowers seeking microloans must show a history of on-time repayments, whereas borrowers seeking traditional loans need only prove steady cash flow.
A. Incorrect. Traditional lenders do not limit loans to large firms, and the passage does not say microloans go only to first-time sole proprietors. Size of firm and prior business experience are never given as screening criteria.
B. Correct Answer. The passage says traditional loans go to people with “strong credit histories and steady employment,” while microloans are “available without collateral to individuals with questionable credit histories who may or may not be employed,” provided they have “a clearly defined plan for a small business.” This option restates exactly that contrast.
C. Incorrect. Collateral is mentioned only for microloans (they require none). Traditional loans may or may not require collateral, but the passage does not specify it. Weekly progress meetings were an early administrative tactic for microloans, not a qualification for borrowers.
D. Incorrect. The passage does not say traditional lenders care mainly about social impact, nor that micro-lenders screen for financial returns. Traditional lenders focus on credit and employment; micro-lenders focus on a clear small-business plan.
E. Incorrect. Microloan applicants are not asked for a repayment history; many recipients have no prior borrowing record. Traditional borrowers need strong credit and steady employment, not merely “steady cash flow.” This option reverses and distorts the stated qualifications.
The correct answer is B
Though there are several administrative options for microloan programs, one of the earliest has remained the most common. According to this approach, a branch of an established bank or a bank specially formed to issue microloans will locate in an area of need and begin issuing loans to local entrepreneurs. In the early years of microloan programs, banks frequently set up village committees, composed of financial advisors and bank staff, to host weekly progress meetings. This proved a difficult administrative strategy to maintain, however, when villagers began to default on their loans just to avoid the meetings and what they often perceived as interference in their businesses. Though most banks quickly revised this approach when they realized its negative potential, the trust vacuum created when they could not offer a return to investors led many banks to seek other forms of administration.
Which of the following best states the difference in borrower qualifications for traditional loans and microloans as described in the passage?
A. Traditional loans are issued only to large firms with documented profits, whereas microloans go exclusively to sole proprietors who have never run a business before.
B. Traditional lenders require applicants to have strong credit histories and steady employment, whereas micro-lenders focus on borrowers who present a clear plan for a small business regardless of credit or current job status.
C. Applicants for traditional loans must pledge collateral, while applicants for microloans avoid collateral by agreeing to weekly progress meetings with bank staff.
D. Traditional lenders screen candidates chiefly on the projected social impact of their ventures, whereas micro-lenders screen them on expected financial returns.
E. Borrowers seeking microloans must show a history of on-time repayments, whereas borrowers seeking traditional loans need only prove steady cash flow.
Show Spoiler Explanation
A. Incorrect. Traditional lenders do not limit loans to large firms, and the passage does not say microloans go only to first-time sole proprietors. Size of firm and prior business experience are never given as screening criteria.
B. Correct Answer. The passage says traditional loans go to people with “strong credit histories and steady employment,” while microloans are “available without collateral to individuals with questionable credit histories who may or may not be employed,” provided they have “a clearly defined plan for a small business.” This option restates exactly that contrast.
C. Incorrect. Collateral is mentioned only for microloans (they require none). Traditional loans may or may not require collateral, but the passage does not specify it. Weekly progress meetings were an early administrative tactic for microloans, not a qualification for borrowers.
D. Incorrect. The passage does not say traditional lenders care mainly about social impact, nor that micro-lenders screen for financial returns. Traditional lenders focus on credit and employment; micro-lenders focus on a clear small-business plan.
E. Incorrect. Microloan applicants are not asked for a repayment history; many recipients have no prior borrowing record. Traditional borrowers need strong credit and steady employment, not merely “steady cash flow.” This option reverses and distorts the stated qualifications.
The correct answer is B
07 Aug 2026, 07:39
Kudos
Bookmarks
Explanation
A. Incorrect. Traditional lenders do not limit loans to large firms, and the passage does not say microloans go only to first-time sole proprietors. Size of firm and prior business experience are never given as screening criteria.
B. Correct Answer. The passage says traditional loans go to people with “strong credit histories and steady employment,” while microloans are “available without collateral to individuals with questionable credit histories who may or may not be employed,” provided they have “a clearly defined plan for a small business.” This option restates exactly that contrast.
C. Incorrect. Collateral is mentioned only for microloans (they require none). Traditional loans may or may not require collateral, but the passage does not specify it. Weekly progress meetings were an early administrative tactic for microloans, not a qualification for borrowers.
D. Incorrect. The passage does not say traditional lenders care mainly about social impact, nor that micro-lenders screen for financial returns. Traditional lenders focus on credit and employment; micro-lenders focus on a clear small-business plan.
E. Incorrect. Microloan applicants are not asked for a repayment history; many recipients have no prior borrowing record. Traditional borrowers need strong credit and steady employment, not merely “steady cash flow.” This option reverses and distorts the stated qualifications.
The correct answer is B
A. Incorrect. Traditional lenders do not limit loans to large firms, and the passage does not say microloans go only to first-time sole proprietors. Size of firm and prior business experience are never given as screening criteria.
B. Correct Answer. The passage says traditional loans go to people with “strong credit histories and steady employment,” while microloans are “available without collateral to individuals with questionable credit histories who may or may not be employed,” provided they have “a clearly defined plan for a small business.” This option restates exactly that contrast.
C. Incorrect. Collateral is mentioned only for microloans (they require none). Traditional loans may or may not require collateral, but the passage does not specify it. Weekly progress meetings were an early administrative tactic for microloans, not a qualification for borrowers.
D. Incorrect. The passage does not say traditional lenders care mainly about social impact, nor that micro-lenders screen for financial returns. Traditional lenders focus on credit and employment; micro-lenders focus on a clear small-business plan.
E. Incorrect. Microloan applicants are not asked for a repayment history; many recipients have no prior borrowing record. Traditional borrowers need strong credit and steady employment, not merely “steady cash flow.” This option reverses and distorts the stated qualifications.
The correct answer is B
