Why Microfinancing is Important to
Microfiancé is just like microcredit for small businesses and provides
access to the capital. It is often seen that the small entrepreneurs do
not have the access to the traditional sources of financing and it is
because of the risk associated with a new venture. In short, it is hard for
new start-ups or small businesses to access finance or loan from
financial institutions, hence they don’t get the required funds for
growing their business.
Microfinancing is access to the savings bank account, providing loans
and credits to the small business owners and they should know the
basics of small business loan to support their venture. As microfinance
is financial assistance that is provided to the new start-ups to improvise
their goals and business performance. It allows the entrepreneurs to
avail of the loans at reasonable rates and is consistent with ethical
We all know that finance is like blood for a business, if a venture gets
adequate financial assistance then it can grow faster and establish itself
effectively. So nurturing a new startup, there is a significant role of
How Microfinancing Works?
Microfinance fulfills the need for initial capital that is required to
operate a business successfully. This helps the ventures in financial
independence and operating the trade activities efficiently. The loans
which are provided to the small entrepreneurs demand no collateral
but the rate of interest may be high.
Micro Financing includes the terms like micro-savings, microloans and
insurance. The microfinance institutions provide small loans to the new
setups and help them in growth and development. You might wonder
why the traditional paths are not opted by the small businesses, Right!
The reason is many entrepreneurs who have business ideas can not
avail of the facility of traditional loans, especially in developing nations.
Therefore to execute the business idea, many ventures rely upon