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"Microfinance refers to the financial services provided to low-income individuals or groups who are typically excluded from traditional banking. Most microfinance institutions focus on offering credit in the form of small working capital loans, sometimes called microloans or microcredit." (https://finca.org/our-work/microfinance#:~:text=Microfinance%20refers%20to%20the%20financial,sometimes%20called%20microloans%20or%20microcredit.)

As someone from a country with quite a lot of poor families, the idea of microfinance is not as uncommon. However I must clarify that microfinance is different from government aid. Hence the question arises of does microfinance actually help the poor? I can say that it can be better than government aid since government aid are just money (and not much money at all) given to families to help them survive the day, the week or the month. But microfinance can help the poor get on their feet and eventually be self-sufficient. But just like with traditional banks, microfinance give out loans with interests. Though probably lower than what traditional banks offer, it can still be risky for the poor to get help through microfinance and set up a business that has no guarantee of being successful.

Still, it is a good start for the poor to at least try and get themselves out of poverty. We know that traditional banks usually only give out loans to those who think they can actually pay back and are very strict with the money they will give. Do you think that microfinance help the poor or are there other ways to get out of poverty?

Without overestimating the usefulness of microfinance, I must say the system brings banking closer to the people, making banking facilities easily accessible to the common people since they are the major target.

A system that offers grants and loans to the common man is a welcome development. Poor people cannot be competing with the rich for these benefits that have been brought to their doorsteps.

In my country, poor people are encouraged through microfinance to save out of their small earnings, and it has helped most common people, especially farmers and petty traders, raise money to buy assets for themselves or even raise capital for their businesses and small ventures.

However, microfinance is still not enough to get a poor man out of poverty.

On paper, it works, but in reality, it's not too different from conventional banking. They only give out loans to people with good credit or to people who have a means of paying back. On paper, it is made to sound like they give loans to any person who can't afford a conventional bank, but it's not so.
Microfinance gives credit to people who are not rich enough for the big banks, but also not poor. They give to people who have businesses and a way to pay the loans back. They back people with business ideas, and with nothing to show for it. You need to have a steady source of income and good credit.

This doesn't mean I have a thing against microfinance, far from it. On the contrary, I like it. I don't expect them to give loans to every Tom, Dick and Harry that walks into their halls, they're in business to make profit after all.
Every country needs to have a good small business level to be successful, and that is where microfinance comes in. They help small businesses get access to funds they ordinarily wouldn't get from the big banks.
In my country, microfinancing doesn't work, and that is a reason for its struggles.

I worked in some very small microfinancing projects, and I have to say, it does work -- depending on what you define "working". Quite proud of it in some cases but even without that experience, do you guys really know what you're talking about?

I won't pretend to know what 2025 looks like in terms of microfinance but 15 years ago, we were talking about $50 loans here -- say, for a small gardening project, it's seeds, fertiliser, tools, pesticide for a harvest cycle. Or $15 for a guy to buy a bicycle and stand to fry fritters on a street. And they're only paying those back in years, giving them some kind of revenue-generating opportunity to pay the loan back and grow. Microfinance schemes I worked with were very small and actually keep giving better loans (bigger amounts and better interest) with repayment, so many people can grow whatever business it is they're doing.

These schemes generally come with free training, and provide free or assisted aspects. Suppliers, downstream access, even licences etc.

Making burgers? we'll find the buyers. The suppliers. There's a 30-year old scheme with a street burger chain in my country, they loan you the stand, umbrella, cooking stove, supply all the patties and buns, you just cook and sell. They provide training in cooking, hygiene, recipes etc. That's just one example I know about.

Also, one misconception about microcredit is their interest. They actually usually are higher than what regular banks charge but are lower than say, moneylenders and Uncle Baba who'll break your legs if you can't pay double in a week. That $15 loan? You're usually expected to pay maybe even $20 back (33% interest), but over a year, it's manageable once the revenue starts coming. Why do you think MFIs are booming in the developing world?

Microfinance is not a super traditional business. Even though there are many instances of successful micro finance company. But it requires a very different approach than a traditional Bank. Microfinance companies not only give out loan at a lower interest rate, but it also helps the poor people to market their product to the right group of buyers. So it's an ecosystem they create.

These kind of small loans really help poor people in a great way. If you are really interested to know more, learn about Bandhan Bank from India. They have now become a billion dollar enterprise, but they had started as a Micro finance company and helped millions of lives along the way.

Know this and you will have peace of mind, no banking institution regardless of the niche they are under is going to help you, in fact throw away what you were taught in school concerning how the bank helps people. The reality is that the banking was never meant to help the masses rather it is the other way round.
If there is any group of people that the bank help is the wealthy because the can easily take loan from the bank fund their lifestyle and avoid taxes that would have come to them.

I think the microfinance system is the one that works with rural and semi urban areas, it tries to bring the idea of giving them soft loans and other financial services for people within the rural and semi urban areas especially farmers, Petty traders and coorporate organizations within the locality, since they don't have the availability of commercial banks and probably the Central Bank within them.

 So the idea of microfinancing is to bring relief to the rural communities by giving them different services or financial assistance that they are to pay back gradually. The problem most microfinance face in developing countries its system failure, while giving out loans, most of the microfinance don't have high interest rate but yet you will see most of those people that have collected loan defaulting to pay their loans or service the interest thereby dwafting the effort of the microfinance in making revenue to keep their services running.

As someone from a country where Microfinance at peak here and I would say it's a double edged sword more like a credit card but made available to everyone. It boosts consumerism so definitely a big jump in the sales of products but people may lack the concept of savings if they get addicted to this small finance that enables them to buy anything with almost no initial payment. I am against it just to make the people to follow the delayed gratification so they will practice healthy finance not the other way round.

I'd say that yes, Microfinance - like many financial initiatives - can work very well in helping people get out of poverty, but it has to be administered correctly and should never be considered a free hand out. The problem that many people with no money face is having a great idea and ability to work it, but the barrier to entry being needing a sum of upfront capital. Take land for example, someone might rent a tenth of an acre of 25 dollars a month and make 50 dollars a month worth of crops from it, but without stability of a grant or loan they might not have anyone else who will trust them with such a venture without charging them a high rate that wipes out the incentive. A government or charity funded grant would not be seeking to make a heavy profit, but rather give people in the country more self sufficiency and help the local economy, while also reducing the unemployment rate.

micro financing is the bull$h!t industry that lets people put their uber-eats meal deliveries, groceries and clothing on finance,
a big player in my area is klarna that allow people to buy now pay later where the late payment fees are worse than loan sharks

Loans or credit facilities should only be given to people who will pay back. If you don't have a viable business that needs capital to start or expand, you don't have any business with microfinance institutions. If your intention is to collect loans or credits and use them on your needs, don't ever collect loans.

Some people, mainly in developing nations, usually take loans or grants from government institutions with the aim of not paying them back. Due to corruption and poor management, these government financial agencies that were established to grant financial assistance to qualified people will be used for political patronage or settlement. Because these beneficiaries don't have any business plan, they will end up wasting the money thereby destroying such noble initiative.

Microfinancing can help create millionaires among the poor if they are well managed and the right people are granted access to funds.

In rural communities, microfinance banks are the star banks.

Farmers, fishermen and market women and other small scale business owners all benefit from microfinance banks. They know the people in the community where they are located. They help them to support their business.

The locals know this and are dependent on them when their businesses need support. Microfinance banks remain an integral part of their community.

Micro finance is definitely very important but it is even more important for those who are financially weak. No amount of money should ever be neglected. It is possible to become very rich by saving small amounts of money but if we neglect micro finance then our financial growth cannot be very fast. Learning money management is very important to reduce the misuse of money by a person. And finally micro finance can play a very big role. So I think micro finance is definitely very effective for a person's financial growth. And I always like micro finance a lot.

Yes! Especially in our country that has a lot of farmers that aren't given the attention by the national government and that's why they're likely on their own. Doing all of these finances of fertilizers, water pumps and other important factors that they need to sustain the food security of our country. They're using these microfinances and microbanks for them to help the production of rice and other crops that are vital to our country which are considered staple food. And it's not just all about being poor but having to see such service that are helping them to provide what are not being given to them. The huge banks are strict and they're mostly targeting the big enterprises and corporations. And that's why microfinance helps these sectors that lack of support from the bigger agencies.

Any scheme or service that supports low-income individuals definitely works. The loan is a microloan and so it is not a big loan, but if the individuals who receive it put it to good use, then they could grow the capital and have enough to repay the loan and interest, and also to sustain whatever business they started with the loan.

That said, you'd not expect to get rich quick through microloans, but it is a good start for a smart person to grow something they have interest in, so guess we can say it works.

It is good news that it has helped a lot of people. I must say I did realize that it also really depends on the country. If a country has very high corruption rate, projects such as microfinance can't be operating to its maximum efficiency. Therefore will not be helping people the way the project intends to do. But if it does work out perfectly for other countries then we must learn a lot.
Unfortunately. Even with government help, it is not really still that easy. It can be easier with help sure but there is still always a long way ahead for someone to get out of poverty. We should not completely depend on the government alone.

Depends on what you define as "help." Microfinance is risk transfer not charity. You hand someone debt, not a safety net, and call it empowerment. Sometimes it sparks real change (microbusinesses, community growth) but sometimes it’s a treadmill: microloans feed micro-debts. Though most wealth was created on group investments, we enjoy the narrative of self-reliance. Microfinance seems contemporary, yet it usually only serves to reinterpret the old concept of "lift yourself up." Maybe mix microcredit with systematic investments if we wish for actual change. Otherwise, it is simply poverty followed with paperwork

I believe microfinance help the poor in improving their way of living.  With the help of microfinance, people who have ideas but not enough money is able to realized their idea which can improve their way of living.  I have seen several people who used to be very poor to the point of missing their monthly rental but are able to establish a good source of income that can support their needs and enable them to save money for further investment.  Although microfinance charges interest, it is not that big and does not require any collateral from the borrower.

There are other ways to get out of poverty but I believe Microfinance can kickstart any kind of plans to get out of poverty.

Most government loans and grants are distributed through microfiber banks since they're banks kept for direct assistance to the people. It's a bank for the grassroot and you don't expect a very heavy amount from them unless directed by the government.

Microfinance banks works well since they empower people directly, in my country there's a microfinance bank that gives out terminals to people for POS services and collect their charge via commissions from transactions carried out by the vendors. There are microfinance banks that gives agricultural loans to farmers to help them get better tools for their work.

Microfinance is transforming the banking sector in my country as the offer outstanding services to people who were more or less subjected to untold suffering by the big banks. Through the microfinance banking initiatives, so many small businesses have been rejuvenated consequently,  many jobs have been added to the labor market. Therefore, microfinance does work in my country and it is one of the best initiate of the government to support small and medium scale businesses.

It does work.

Microfinance is a good business idea, it might be as simple as offering loan with interest, but they have to calculate the risk, they have to learn the borrower profile, they have to be/partner with debt collectors etc. They need to create the whole system similar banks which is hard to create alone.

Some people even prefer to use microfinance because they're less likely to get audit by institutions e.g. if you have x amount in banks, you're likely to being included as "rich" and they will offer their products.

I have seen a lot of small scale businesses running based on the help of loans from microfinance, and it has helped a lot of poor people with good business orientation and experience start up their own businesses in which they pay back the interest based on their agreed terms and conditions.

Some people whose businesses is collapsing, they take loans from these microfinance companies to boost up their businesses. It's working perfectly for those poor people who understand the business that they are taking the loan to run and how to manage the business properly. Some people, the loan becomes a big problem for them to pay back after the said purpose of taking the loan failed.

It is a banking business that is very useful for people whose businesses are small and need some help to sustain it. I like it because they help to grow the local economy by helping these people stay in business through their loans and other small scale financing opportunities. And you can be sure to get that small loan to boost your business revenue. I also think that once your business is hitting an x.number of revenue per year, you will have to move up to the higher banks to get a loan if you need one.

It's can actually work is that it also can depend and vary insignificantly on purpose and banking expectations.Microfinance is seems to help small scale businesses the most  because not everyone can access the relevant skills and implement economics support largely.

Microfinance is a system that is full of debt traps and markets itself through over-hyped impact on poverty. But if done right, I guess it could solve problems for the unbanked and a minority group of individuals, but their needs must be carefully considered and structured.

I have yet to hear any testimonies of microfinance saving someone from financial ruin. If anything most people get duped into taking up high interest loans that normal banks would not even be allowed to give.

I have also seen some businesses grow through financial support from microfinance banks. One advantage of these loans is that they are easy to access and sometimes without collateral. The rigorous process of getting loans from conventional banks is sometimes very cumbersome.

But these microfinance banks can be ruthless if you default on the repayments. I have seen someone go to prison because he was a surety to a debtor. Business owners should be careful with these loans to avoid financial mismanagement.

From my perspective, I understand that microfinance plays an important role in the economic development of poor countries and the people of that country. Although microfinance institutions provide loans to the ordinary people at higher interest rates than the conventional banking system, if a poor person does not get the money at the right time according to his needs, then there is no advantage to get the money. Even if the government finances all those people, it is a matter of time. Moreover, no government bank can ever stand by the ordinary people in the way that microfinance institutions can reach. No matter how a person gets the loan on time, no other government institution can give it. That is why I will definitely support microfinance.

https://talkimg.com/images/2025/05/24/UaiIFD.jpeg (https://fastercapital.com/topics/impact-of-microfinance-on-poverty-alleviation.html)

I think microfinance is one of the worst economic phenomena of our century. The thing is that microfinance organizations usually provide loans at very high interest rates, and people who take these loans practically never read the contract. And even if they read it, they do not understand at all what is being discussed, and then they are surprised why they have to pay back the loan five times in a short period of time.

I think the saying "don't give someone a fish, give them a fishing rod and teach them how to fish" is very appropriate here. I mean that people's fates won't be changed by some money given on credit; people need to change their consciousness and learn money management.

Well microfinance has helped alot of poor people to achieve success when the traditional banking system failed them. It is vise versa. Sometimes traditional bank may offer you loan to start up a business if you have a a good documents that can be used as coletheral Incase you fail to comply. But in the microfinance, even though you don't have what to offer as coletheral in return Incase of failure to comply, then there should be a guarantor to sign shorty on behalf of you. With that loan is made easy and can help the person to achieve success faster. What I understand is that microfinance makes it easy to support people than traditional bank. There protocol makes it even harder for people to find solution from them.

It will be helpful as long as the interest isn't predatory.

After all, certain class of people do really need a more simplified access to capital but I think it will still face the difficulty that traditional banking has which is risk of defaults and so on.

From what I see though, their interests always too high and can become a hurdle instead.

Microfinance is not a way of getting out of poverty but it serves as a helping hand reaching out to the poor masses needs when the government have failed in their responsibilities in doing so, they stand as a unitary body that takes the needs burdens to themselves and reduce it by rendering financial aid.regardless they actually work but the negative sides of it is they offer good services of loans but with high interest rate thereby Making it unable for the poor masses to pay up.

Yes, this situation can be burdensome depending on the type of loan we agree to in increasing capital or initial capital, there are many burdensome factors if we are borrowers in traditional banking. because of course in the business world there are always ups and downs that will occur with fixed installments every month plus interest that is too high while limited income is what burdens them. and becomes a barrier to increasing capital.

This is really very interesting subject for discussion. It's very hard for people with low to no income and no credit history to get a loan. Small local lenders charge very high interest rates, making it impossible to pay back peacefully and that's where Microfinances shine cause they usually offer low interest rate. By the way, the problem is that most poor people are uneducated and they use a loan for consumption, not for investment or starting a business. So, instead of helping them, loans taken from microfinances are becoming a burden for them. It's really 50/50, for some people who are smart but life conditions forced them to be poor, such loans can be a huge help and there are some successful businesses that benefited from it but for many poor people, it's becoming a burden.

Definitely doesn't help. Most poor people don't have decent educational backgrounds, so how are they going to be able to manage their finances in a way they can repay the loan later? I know poor people who didn't even understand how it worked, but got the loan, because they thought it was "free money" being given.

In my opinion, poor people shouldn't even have credit cards, because it can be a source of further accumulated debt on long run (thanks to the interest rates added for not paying the debt in time).

Instead of microfinance, poor people need education and work.

Microfinance helps "poor" microfinance organization owners become "rich". :)

You are comparing two completely different things. State (social) aid is gratuitous, while microfinance requires repayment of debts + interest for use.

It would sound funny if it weren't sad. The poor only become poorer from using microfinance loans.

Compared to traditional banks, these are crazy interest rates.

Poor people start businesses with money borrowed from microfinance organizations? It sounds surreal. Have you seen a business that pays for itself in a couple of days or weeks? I haven't. And interest is charged every day for using a loan from a microfinance organization. Such a business will go bankrupt before it even gets off the ground.

This looks crazy.

Well, of course, that's true. The bank carefully checks the reliability of the business idea, because it doesn't want to risk money in vain.

You mistakenly believe that microfinance is generous and selfless altruists.

The only way to get out of poverty is to acquire skills that are in demand in society and that can be "sold" at a higher price.

Recently many experiments happen but no one trying to have better things which really works to end poverty because no one working on which actual works like education and skills this can bring changes better instead of working on things which are not for all.

In many countries where peoples really want to bring changes working on things which are important but few those are still having colonial mindsets not like this and always want to keep peoples under their control so they are bringing strategies like microfinance and related because with this banking system will work, and they could be able to have their interest and profit in new shape. Many are coming under this trap and jumping in this well where they have no chance of coming out because this is beautiful trap for them which will be screwed them with their next generation as well.

There are dozens of ways to get out of poverty. I think microfinance is one big help. It's the one opportunity that's absent in so many communities that could indeed lift a family or a small community out of their abject condition.

The big problem, however, as I've directly observed as well, is that many people are only eager to get the money. Some of them aren't really ready with the livelihood they have in mind. They aren't really well-equipped to start a business. Others are even submitting proposals merely for compliance. The only goal in mind is to get the money.

In which case, I think microfinance should also offer solid capability and empowerment programs to make sure the money is well spent and the beneficiaries guided every step of the way. It isn't easy to even come up with a business let alone to operate one.

Some people get the wrong meaning of microfinance, they think that they give people money to do businesses to escape poverty. Microfinance are banking businesses that gives small business people loans and they repay the loans with INTEREST. I have years of experience with microfinance banks, they are not charitable in anyway, if you don't repay their loans they will follow every legal means to recover their capital plus the interest.

Amount that microfinance can borrow you depends on the worth of goods in your shop and the property in your house. Microfinance is good, they assist small business with small loans to grow. From my experience it is very wrong to hope on microfinance loan to startup a new business, they won't even consider the application. You should start with your capital and only apply for a loan when there is high demand for your goods. It is a mistake to use microfinance loan to stockup your shop, if you don't make fast turnover you will most likely sell off at a loss to repay them.

The initial aim of micro finance is to reach out to people especially small business owners and to offer them a helping hands through loans with them paying back with little interest that won't affect their businesses. Right now corruption has taking over the establishment they now prefer to offer the services they render to a selected number of individuals and use high rate of loans to chase away the poor who is the man reason of the establishment.

The government has failed her people because they no longer check mate the establishment that is meant to render services to the people, if the banks can do things and get away with it then most of the micro finance banks can do whatever they like so long as no one is there to monitor them.

In my country this mircofinance thing has helped a lot of people, like teachers, farmers and business or store runners but there is another bad side to this, some people still ended up with more debt on the longer run, shit happens like they say and small debt became huge debt.

Debt is far more suitable for some set of people, those who have a lot of properties or they are just rich, yes this mircofinance this is deigsn to help those who have less money but let's not forget that some people will take such money and risk it on business ideas.

When you are going for a business that brings money the risk will always be there, in your own turn things can go sore and the unexpected happen, I've ran businesses that fold up in the end, I walked away easily because all the money was mine, if it comes as debt it is another trouble for me.

In my country there is a term KUR loan which is given to people who want to start a business and this is intended for lower middle class people especially those who want to develop small and medium businesses. In terms of benefits, I see this as one of the opportunities that can be taken by the poor because this loan has a low interest rate so it is not too burdensome for them when taking out a loan.

The ones who can help get out of poverty are themselves because if they want to try there must be a way, but what we see is that people are too lazy and don't want to take a little risk to get out of poverty. Without their own desire, it is difficult to overcome this because other people do not have the responsibility to do more about this problem.

Microfinance is a paradox factory. Yes, it sparks a lot of energy at the bottom, teachers and shop owners get a shot, and sometimes the community vibe gets stronger. But the core flaw is simple: debt amplifies outcomes, not intentions. If your project flies, you climb; if it tanks, you drown faster. It’s never just about “access”. It’s about resilience. Most small borrowers have zero buffer. So we sell hope but also volatility. And we ignore how much of “success” in microfinance is just survival with new anxiety. Big picture, debt fits the rich better than the hustling poor. But without alternatives, microfinance is less a ladder, more a lottery, and the “empowerment” tagline gets blurry when the repayment cycle becomes the new boss

It is what it is, if you fail to handle a loan properly, it will definitely be counterproductive and you will be left with debt on your hands. Microfinance is a good option for people who cannot get loans from traditional banks and after receiving the loan, it is up to the creditor to use it wisely and grow their business.

Receiving a loan is risky, particularly when you do not have assets or means to repay the loan easily, and since Microfinance targets low-income individuals, there would definitely be issues of repayment and debts running from the loan.

Micro finance banks helps to uplift poor people through helping them securing small time loans to help them build a business for themselves, not relatively a big business but one that can help them to achieve a means of sustenance in the overwhelming demanding world where the rich are favor the most for bigger loans through traditional banks. Government control both of this banks as they have a final say as to how this banks operate, so their main purpose is not to alleviate poverty but to help reduce it in the system.

When you get a chance as a petty trader to access loans through micro finance banks, it is better you take it to help build yourself, you can’t tell how far the business can take you even if it was never enough in the first place to help you achieve your dream goals so easily. When some of this money intervention are given as form of grants, some people misuse it, so they ditch it out as form of loans to have this people have the right to using it well in order to enable them pay back within the timeframe allocated to pay back.

Difficulty in getting loans will make it difficult for people to build the businesses they are engaged in and the high interest on loans that must be paid can also limit them from developing.
Basically, getting out of poverty really depends on each individual and they must have a plan that can be done slowly.
We see that there are a number of people who do not dare to take opportunities for various reasons, especially regarding capital and the availability of loans like this can help them also want to change their lives for the better.

To get out of poverty, a person must have a job that can generate money consistently, this is not talking about how big or small the income is.
After they get money consistently, they will think about ways to earn more, such as investing or developing a bigger business.

Where I live, microfinances are no different from banks. Their interest rates are very high, starting from an early 27% loan interest rate and going up very high. Microfinances often offer loans based on gold as collateral and another popular collateral for them is the car. Still, they often rate cars very badly and if a car costs $5000, they'll rate it as $3000 and charge you a high interest rate. In the end, it becomes more burden for a poor person who wants money because with a poor man's salary, it's very hard to pay back 100% of the capital + 30% interest rate. If it were 5-6%, it would be easier, but 30% is too much to handle. I've seen more unhappy people than happy people with these loans.

Either the commercial banks or the Fintech banks, they all grants their customers access to loans. Although the commerical banks could be more strict with the poor on that request because even when you goes to process transactions in the banks, the bank officials will always attend to you specially while the poor will be treated optional.
The Microfinance institutions is always acted friendly like the neighborhood, at some point, the could even grant your loan request without demanding for collateral unlike the commercial banks that acts biased. The only thing skeptic about the Fintech banks is that some had acted like the Ponzi in the past where customers

Microfinance is working all over the World and it is giving debt to the people and they are using this debt to fulfill their needs . Microfinance is best if it will give money without any interest because there are poor people who are taking debt from that because they need this for the liabilities to show to rich people they are rich Price and some people actually need this for different purposes. There are thousands of people who are taking loan for motorcycle or car but they are not doing well because they are becoming poor by that.Some people trapped in difficult family situation and they need money to escape from that and microfinance can work well for them and we could see good results from that .

Same here in our country on which Banks would be having the lowest interest rate on which this is the best choice or option when you are trying to get up some loan but the main issue on here is that not all people would be having the opportunity on granted out some loans on which considering that the requirements for people to be eligible on getting a loan will be that tough and thats why they do end up on going into these microfinances just because they dont have any options and even despite of having that big or huge interest but still they would be needing up to deal up with it and thats the reality. Whenever you have decided on taking up some loans with these financing then make it sure that you do be responsible on repaying up those loans because interest and penalties are much more worst than with the banks. Some people do say that these institutions or companies are shit but come to think that these are that very helpful when you are having no choice or other options specially that you are in need. Does it really work? If we do speak about into those borrowers then everything will be basing up into the business that they are that trying out to do or even just that simply been that speaking about on how they would be using up those loan amount because success isnt something that you cant be able to know whether it would be able to push through or you would be failing up with those loaned amount that you had borrowed.

In this era we are living in, if you do not have money or your income is low then in today's era, your survival becomes very difficult according to the people of today. But if you want to double or increase your income with less money, then you should understand microfinance. You should know how to invest your money in a short-term way and in a useful place to create better opportunities for yourself and double your income and improve your standard of living. Because apart from this we do not see any other option. The platform where you can double your income with your little money is not there. So microfinance is an excellent and useful platform that is undoubtedly benefiting people.

It is because bank needs lot of documents to provide a secured loan so yeah they need to make sure the borrower got the capability of paying it back except you are too rich they will just pump money on you. While these small loans offers accessibility to poor with high interest rates or simply less time frame but these are all offered to consume something not really to make anything productive, right?

They won't offer you a small loan if you are going to buy books but the same compnay will give you loan to buy an iPhone, which makes it pretty clear what their intention is behind this strategy.

It’s good help definitely. But there is still the risk of the business failing. So they need to be smart about what they are to do because taking out a loan doesn’t mean that they will have guarantee profit.
It’s not that easy to take out a loan if we are being honest. Even if there are projects that particularly help those that are poor, there are still some requirements left that can be difficult to achieve. Like I said there’s no guarantee of profiting so these requirements should be in place otherwise people can just take loans and use it for anything not really driving them forward.

It doesn't guarantee profit once they've taken a loan and they're also taking chances. But if someone is eager to start a small start up or a business, they know the two possible results that they might getting up. And that's why they're trying still because if it becomes a huge hit, they're going to keep doing that. If they fail, they'll simply have to pay the loan and try something else again.

And this is where microfinance gets in, as long as the proof is visible. The lenders are going to allow even the smallest in the community to grant a loanable amount that is payable and the interest won't hurt them much. This is like a support group that they're giving to the less privilege people in some far places.

I don't think microfinance can give loan without interest, if they should do that then of what interest is it to them to handle such affair? AF far as anything organization is exterblished, it purpose is toake money even if it comes in form of a charity organizations but there should be ways to compensate there workers. All I am saying is that microfinance gives loan but with less interest and often comes with coletheral depending on the level of your loan. So it can't be totally free because government itself can not give you loan without something in return.

 

Poor doesn't mean you're lazy. It's a subjective term for me and if you mean those who are living with only enough income then it does help the poor based on my experience in our country. Like for example, small farmers here who have a small farmland can borrow a capital to some cooperatives to buy seeds and fertilizers. The payment can even be the crops usually rice grown in that land or hard cash.

If you want to establish a small business but don't have the extra money for it, there are private sectors that can lend you a small amount as a starting capital. There are even educational loans you can apply, you just need to have at least a job or any source of income which is their main basis if you can pay them or not.

At least, poor people can see a new hope by using microfinance and change their life slowly. Though they must search for how to use that money with right so they can survive in the hard situation and be self-sufficient.

I see some people take a loan from the bank to grow their small home business but not many of them can survive and pay the loan until it finish. So they need to have responsibilities that they need to repay the money because the money is not free. That money help them to survive and if they can use it to create a business even if that is a small business, that will not be a problem.

It need understanding from those people that it is a chance for them to try. If those people have a plan how to use the money and discipline with other things, they will change their life to be better.

Microfinance do many benefits to the affected people or in the way of self -sufficiency. The poor or rich ways need human debt. Those who do not have the opportunity to borrow from the government powered banking sector, but they get loans from small loans in different regions. However, the amount of profit can be slightly less than the amount of bank. And with that money, starting the business and starting to repay the debt based on a week based or month based debt and gradually become self sufficient. On the other hand, the rich people borrow a lot of time to set up big industries or companies or pay workers' salaries. To me it seems very normal. Microfinance bring poor people out of poverty.

Actually microfinance aid works easily on different countries, thought difficult, or very rear on some other countries, but the bottom line is that microfinance are meant to help the low income earners to alleviate their poor financial level, basically to enhance their business, especially in the rural areas. This financial services come in the form of small loans, sayings, and insurance.
However, there may be some difficulties in obtaining this services because of the Services provider's, or the microfinance bank "terms and conditions" to get this services. This "terms and conditions"varies on different countries, and it may hinders individuals ability to obtain the services.

In my country there is not a big difference between rates offered by banks and microfinances but microfinances are more risky in giving you a loan if you are a poor person. If microfinances don't give you a loan, then there are pawnshops that are really on devil's side. I've seen lots of people with iPhones giving them to the pawnshop for 50% of its real price. The last resort, even if a pawnshop doesn't work, is an individual who illegally gives money to people but these people charge very high interest rate, twice more than what banks or microfinances charge and they are very bad people if you mess up with them.

Do bank be it traditional or microfinance gives out loan to customer without checking out their transaction history? NO. As long as the bank is benefitting from you and they are sure you are on a certain payroll where your monthly credits can be deducted to balance up the laon, then thats a good to go step. No microfinance bank gives out loan for free to a customer that cant be trusted and expect the customer to refund back. Also microfinance bank tends to give out loan of small amount thats why most customers are always the farmers, small scale business which they pretty sure the pay back wont be too difficult.

This would be your last resort if you do saw yourself that wont be able to get approved by banks and even into micro finances on which we do know that they cant just that also give out some loan easily. You are definitely right that when it comes to interest then their differences are notable but still not that something big in compared when you are trying out to took up some loan for some individual on which it could reach through 10-20% on which this is that too absurd with this kind of interest. Despite of having these kind of interest but there are still people who do dive in or that agrees up with these terms specially if they dont have any more options or simply doesnt have the choice and they are already that in need of money or funds. Here in our place then there are tons of microfinance companies that lurking around on which this simply means or shows that there are tons of people who do avail up these loans on which they are making use of it for whatever purposes that they do. Does it actually work? For business side then it do works but to expect on every investment or business on which it will be incuring up some loses. It all matters on how you do able to sustain it out because if you are still remaining on positive then you would be still continuing the business. In borrowers perspective when it comes into borrowing up money with these microfinance then it will be that a huge help specially if you do able to utilize those money that you have asked or loaned out. Interest are normal and as long those percentages wont be that much then I dont see any issues with this. Come to think that they havent forced you to take up some lan in the first place and you are the ones who do made out such first approach in regarding on taking up a loan.

In my opinion, microfinance differs from regular loans only in a few minor details and it may be worse in some respects. For example, regular loans can be given to anyone while microfinance loans are granted subject to certain conditions.

The worst thing about microfinance is the collateral required to be provided to the bank. Some banks in countries like mine require collateral or tangible collateral (such as property or assets). If the borrower defaults and is unable to repay on time, their assets may be at risk of being confiscated or seized.

We have literally the same thing on this forum exactly. shasan (https://bitcointalk.org/index.php?action=profile;u=1883627) most famously is doing microloans like crazy, he gives 100 dollars, gets 110 back, gives 250, gets 280 back, if you can't pay it exactly, then he postpones and puts interest to it, and he keeps on making money that way.

I am sure there must be some people who didn't pay their loans at all, because normal banks have default rates too, so I am sure there are people who default here too, and that is understandable. But he is doing microfinancing right on this forum and you can go check and learn more about it. I do not know if he himself would be able to actually talk about how profitable or not it is, but we can be certain that he is doing a fine job running it, because it's a tough business, to do it all alone.

You're definitely correct microfinance has been a help in time especially to the needy and it's the nearest monetary value in physical form that's nearer to the people in which they can get easy access to things. But in the contrary microfinance don't actually help the poor out of poverty but it  reduces the rate of financial redundancy at which people go about limiting themselves from financial stability.

My situation in the Russian Federation with microfinance is very sad and now I will explain why.

Do you know at what interest rate money is issued in such organizations? I will answer. Almost at 300% per annum. Is it possible to get out of poverty under such enslaving conditions? A rhetorical question. On the contrary, it plunges people even deeper into a financial hole from which it is almost impossible to get out. And the situation in the economy is getting worse and more tragic every day due to the high rate of inflation risks.

Giving loans to broke people is a really dumb and risky business model. That's why this particular niche is dominated by "loan sharks" and other shady "payday loan" companies. Such microfinance programs cannot exist without government funding and support. The borrowers have to be monitored closely by government officials, so that it can be sure that they would try to build a fully functional small business and repay the loan. I don't have any verified info about the effectiveness of such microfinance programs. I think that the percentage of poor people becoming financially independent and repaying such loans must be extremely low.

Microfinance were thing of past. They took advantage of the lack of economic literacy of people in rural and remote areas. They take more interest than traditional banks and focuses on the poor and underprivileged which already is an unethical move.

Now is the time of information technology and everyone has access to internet on their hand. Be it remote or rural areas everyone has access to internet and has digital literacy. This enables banks to digitalize their service and reach to places they physically can't. Almost all of modern transactions now occurs online without cash being handed over. People are more financially literate and now they know how and where they could find cheaper loans. The procedure to take loans too is streamlined by most banks with single day loan approvals. Microfinance is dying at least in my locality.

You have raised a beautiful comment among us. Honestly, it depends on a person whether he can remove his poverty with a small loan or not. From my point of view, what I think is this. Before taking a loan, one should find a stable source of income, whether it is monthly income or weekly or daily. For example, there are many people whose income is very low but they have the ability to repay their small loans. If they want, they can save money by taking a loan from the bank and gradually repay it with the money they get from their stable income. The reason for doing this is that the income of all people is very low, at the end of the day or at the end of the month or at the end of the week, they do not have anything to save. If they save money by taking a loan and repay it with their stable income, they will have some amount of money saved.

But there are some people who do not have a source of income. If they take a loan, they will continue to be burdened with one debt after another. Because they do not have any source of income to repay their loans. So before taking a loan, find a stable source of income with which you can repay the loans.

In my opinion, the existence of microfinance organizations is more evil than good. As is known, microfinance organizations provide loans (microcredits) to those borrowers who are not given loans by large commercial banks.

At the same time, microcredits (loans) are issued at very high interest rates. In general, in my opinion, there are a very limited number of situations when it makes sense for an individual to take out loans and credits. These are mortgages (apartments are very expensive, and young families really need their own housing) and (sometimes) education loans. In all other situations, people, in my opinion, should not take out loans (because then they will have to pay the lender not only the principal of the loan, but also the accrued interest).

For poor people, the need to pay high interest to a microfinance organization is a path to poverty.

I used to see microfinance banks as institutions that are targeted at helping the poor raise capital for their businesses, but from the replies I am seeing, I can clearly see that it is far from what I thought. I have enjoyed their services before, so I can't really say much out of experience.

Microfinance banks know that poor people are some of the most gullible and vulnerable people to do business with, so they try to get closer to them, talk to them about helping them raise capital, and in the end, milk them dry through interest rates.

Poor people need basic amenities, good job opportunities, grants, and incentives, not loan facilities that will stress them to pay back.

There are many poor people who take loans, but there are both good and bad sides to debt. Poor people who take loans to move forward financially, if they are used to borrowing, if you are limited in your financial progress, you should definitely develop a saving habit so that you can keep your money. If the habit of borrowing is on your bad side, such as taking another loan even after not being able to repay the loan, as a result, you will not be able to move forward financially and will get stuck in this cycle of debt. Therefore, you should take a loan in a properly planned manner and use it properly.

How do you think they make money if they start giving out loans to people who are simply poor and have to start a business of their own so that they can earn a livelihood? It doesn't work that way; only NGOs can do things like that, but not businesses, especially organizations that involve financing. I have a relative who works in a microfinance bank, and he told me that they don't just give away money to poor people so that they can run businesses, but they give out small loans to groups or individuals who they know are going to do something with it, and they give these to people who they know are going to return the money, and they most probably take some guarantee for it, maybe collateral or something.

Most things in this world are presented in a way that makes people think that they are being done for the betterment of society and to help the needy, but in reality, there is always a motive behind those things that the doers are going to achieve. No one would do anything without seeing any personal benefit.

Microfinance can work but it’s not guaranteed. For some a small loan is enough to kickstart a business or get through a tough time. It can boost confidence & offer real independence. But it doesn’t always lead to lasting change as some people end up stuck in debt. It really depends on how it’s set up & who’s running it. Done right it can make a big difference.

Microfinance is one of the experiments which done by few big players, and they are taking good advantage even its definition and few parts are discussable but still it's not going to help end poverty in many countries even it's increasing problems for them.

As mentioned it's helpful in few regions with mostly its interest rates and few other things have never been allowing peoples those are vulnerable to develop their ways and also end their problems because it's never been part of this game which is having new names but always stay here to suck the blood of poor. If societies give basic things to poor then surely many problems will be ended, but they never want to do this because after this they could be not able to control them for their own sack just because of these having things like these which are giving them on interest.