»Microfinance is the practice of providing small loans, usually ranging from $50 - $2000, to low-income, disadvantaged entrepreneurs in the developing world who would otherwise not have access to the capital needed for their businesses to grow.
»What began as a social experiment in the 1970s in Bangladesh by a man named Mohammad Yunus, has become a massively popular bottom-up approach to poverty alleviation, experiencing rapid growth over the last decade. Experts across the board, including the Nobel Commission, have declared microfinance as one of the most sustainable tools in assisting global development.
»Currently there are over 3,000 microfinance institutions (MFIs for short) worldwide. In the past, there has been a misconception that costly loans to poor men and women without any type of collateral were too risky to pursue, even for social reasons, but across the world, microfinance institutions have shown repayment rates of 97-99% (higher than US credit card or student loan repayment rates). As MFIs prove microfinance’s investment viability, even through the current global recession, funding and credibility in microfinance is beginning to improve. However, these institutions are still only serving 10% of the low income entrepreneurs that could use micro-loans to depart from the cyclical and trans-generational poverty plaguing their regions of the world.
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