What is microfinance?
Microfinance generally means providing very poor families with very small loans (microcredit) to help them engage in productive activities or grow their businesses. Over time, microfinance has come to include a broader range of services (credit, savings, insurance, etc.) as we have come to realize that individuals who lack access to traditional formal financial institutions require a variety of financial products.
Who are the clients of microfinance?
The typical microfinance clients are low-income persons that do not have access to formal financial institutions. Microfinance clients are typically self-employed, often household-based entrepreneurs. In rural areas, they are usually small farmers and others who are engaged in small income-generating activities such as food processing and informal trade. In urban areas, microfinance activities are more diverse and include shopkeepers, service providers, artisans and street vendors. Microfinance clients are poor and vulnerable non-poor who have a relatively stable source of income.