What is microfinance?

Microfinance is a banking service aimed at unemployed individuals and small and medium enterprises (SMEs) who lack access to conventional banking and related services.

It involves providing loans, credit, access to savings accounts, insurance policies, and money transfers. These loans are significant as they are issued even without any collateral security. Interest rate is pretty high due to the risk of default. It provides resources and access to capital

35 percent is the average global interest rate charged on microloans. Nonprofit institutions or government approved agencies mostly offer microloans, generally.