Microfinance is the supply of loans, savings, and other
basic financial services to the poor. They normally are small loans, but are
enough for poor people to get by. These loans are small because poor people
aren't likely to want or be able to take out a $50,000 loan, but they will just
be happy with a $1,000 loan. The World Bank estimates that about 160 million
people use microfinance for loans and help that normal banking can't provide. These
small loans are called microcredit. Microfinances offer a few hundred dollars
at a certain time to people in need. By having this income it can dramatically
affect their lifestyle by letting them become self-employed, and make a profit.
With the profit they are able to pay back the loans that they received through microfinancing. These
loans can also be used for housing and education as well. Microfinance institutions can
also provide saving accounts and insurance to their clients. If something was to happen to a client's possessions the money the microfinance helped them save will cover the coast of the damage. Even though
microfinance works very well it doesn't fix all of the problems, but it sure does help.
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