Sharone Perlstein Microfinance BlogLearn about the history and development of microfinance and how low-income earners are able to grow their businesses with small loans with lower interest payments. Go to Blog
The Roots of Microfinance
Microfinance may have taken off in the 20th Century, but it has been around as a concept for hundreds of years. The first record of loans being granted to low-income groups was in the 18th century with the Irish Loan Fund system, which was introduced in order to offer low income earners in Ireland better conditions and a brighter future.
For the most part, a microfinance loan is used to support a small business, or help a person with a low-income start an independent freelance business. Microfinance loans are often available to individuals and groups who would not otherwise have access to traditional banking channels and would probably not be approved for a loan by a traditional lending institution. The amounts that are lent vary by social and financial context, loans granted in rural areas and in underdeveloped nations for instance, are usually smaller than those provided in central and developed areas. Though repayments include interest, they are often cleverly structured so as not to financially burden, or pose unnecessary risk to the client. The interest rates on micro loans are typically lower than traditional loans.
Facts and Figures
With recorded repayment rates of approximately 98.9% in 2016, microfinance loans are at the top when it comes to loan repayment rates. The International Finance Corporation (IFC) reports that over 130 million people have benefited from microfinance operations in some of the poorest nations of the world. The IFC has supported the development of microfinance operations in developing nations by providing improvements to credit reporting bureaus and promoting firmer regulations and governance for micro lenders.
It’s More Than Lending
Microfinance and micro lending continue to grow and evolve as the needs of potential borrowers change. Today, some microfinance organizations also offer insurance and bank accounts to help build their customer base and improve the lives and businesses of their growing clientele.
While not every person who has a low-income is eligible for a micro loan, microfinance definitely presents greater manageable financing options to millions of people in need of designated financial assistance.
Read about Microfinance from around the world by Sharone as he explores Microfinance and it’s effect on thousand of lives around the globe.
From The Press
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A breath of fresh air. Early in 2018 Grab launched a joint venture called Grab Financial Services Asia and is now offering microloans to businesses there. Recently, TechCrunch published that Grab announced that they were in early discussions with Ant Financial,...read more
Although it’s been around for more than 200 years, the State Bank of India is becoming increasingly nervous about its place in the world. According to the bank, emerging FinTech solutions like the payments entity Itzcash and the pioneering credit service Paytm are...read more
If you take a close look at any booming fintech market, you will notice that most companies are moving full steam ahead with the formation of credit and payment products. This means that all focus has been placed on products that scale quickly instead of more...read more
We recently delved into the ways that financial assets stand to benefit from blockchain technology so we can now discuss a bit about which markets stand to be affected most by this trend. There has been much talk recently about blockchain technology, usually in the...read more
Digital innovation is trending in the financial inclusion sector. Words like big data, mobile wallets, and digital credit are buzzwords at financial inclusion and microfinance conferences. Microfinance institutions (MFIs) in general understand that they need to...read more