What Is Microfinance And How It Helps Common Man?


Microfinance breaks the cycle of poverty and gives people a chance to build a better future by improving their financial well-being. Microfinance encourages economic expansion and development while also serving as a source of capital for entrepreneurs and small businesses.

How easy is it to get a loan or credit from the bank if you have a job that pays well, enough collateral, or a successful business, and how does microfinance make this access easier for people who don’t have those things? Numerous financial services are sometimes made available to high-profile individuals or large businesses with minimal effort, without the need for them to demonstrate their worth.

But who takes care of a person or business with limited resources? What if a person is unemployed and in desperate financial need? What if your small business requires immediate funding?

At the very least, banks aren’t always willing to lend you money unless you provide evidence of your financial security. Even in that case, it is not certain that you will be able to acquire it.

This is where the idea of microfinance comes into play.

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What is Microfinance?

The basic concept behind microfinance services is the provision of banking services to low-income or unemployed individuals. The functions that microfinance institutions carry out, such as lending loans, are in line with ethical lending practices. Savings accounts, chequing accounts, and microinsurance services may also be offered by many of these institutions.

Microfinance institutions also focus on expanding small businesses, promoting financial literacy, and promoting inclusion.

In a nutshell, these services are basically what we need because they help build the financial infrastructure from the ground up.

Microfinancing is progressing in the same way that technology and innovation are advancing us in every possible field. There are a lot of apps that are changing the way microfinance works right now.

These apps could be a great way for you to improve your financial situation. Certain aspects of microfinance apps, such as easy loan repayments, readily available credit, and options for future investments, etc. can without a doubt save your finances at any time.

Therefore, microfinance apps are the best option if you’re looking for a convenient place to manage your finances or get access to limited banking services.

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Advantages of Microfinance Apps

Gain Quick Access To Funds

Microfinance apps make it much simpler to sell your home. These apps make it simple to manage and expand a small business. Even if you’re just keeping your business going at the moment and not necessarily diversifying it, you can get access to funds.

Unemployed people can also meet their basic needs and concentrate on improving their skills with readily available resources.

If you’re having trouble finding the money you need to grow your business, you might want to try using a microfinance app, which requires very little paperwork and is easy to use.

The creation of genuine jobs is another positive externality that this has for the economy as a whole.

There is no doubt that when businesses are able to grow, they will hire more people, which will benefit the skilled workforce. The children of these workers’ families will gradually gain access to improved living conditions, nutrition, and educational opportunities as a result of higher wages and employment opportunities.

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Well, even though it is difficult for anyone with a low financial background to get credit from banks, this problem is even worse for some groups of people. Women, people with disabilities, unemployed people, extremely poor people, and so forth are the microfinance institutions’ primary beneficiaries.

By making it simple for people with little to no assets to obtain financial support, microfinance institutions are able to break the stereotype of formal banking institutions.

The key to breaking the cycle of poverty and ensuring economic innovation, skill, and financial well-being is this feature of microfinance institutions.

Even though they are open to everyone, microfinance services with better rates and lower repayment terms typically target female borrowers, who have a hard time finding these services anywhere else.

As a result, the interest rates at which the loans must be repaid are significantly lower than those at other official financial institutions. Because of this, repaying microfinance services is simple for borrowers. In the case of microfinance institutions, approximately 98% of borrowers repay loans, according to statistics.

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Breaking The Cycle Of Poverty

The first step in addressing poverty cycles is to provide financial assistance. That’s what microfinance institutions do. They focus on minor issues and support the economy’s entire financial structure.

In order to guarantee that the economy as a whole expands, it is now absolutely necessary to encourage innovation and provide enough for daily living expenses. Microfinance institutions and apps enable marginalized groups and small businesses to rely on available funds and later make investments to improve their circumstances.

Banks and microfinance institutions operate a financial system that is maintained by the government. Any economy requires this double effect of microfinance institutions and big banks, which each target large and small businesses. 

As evidenced by the high rates of loan repayment, microfinance apps can also generate dependence, significant economic gains, and general happiness.

Financial Education

Many microfinance apps are now placing a significant emphasis, in addition to the financial benefits they provide, on promoting financial literacy among various segments of society.

Your ability to effectively manage your finances is determined by your level of financial awareness, which also influences your investment decisions. Your luck alone won’t make you a financial expert if you don’t get the right advice.

Microfinance apps are attracting new investors and savers by disseminating fundamental and even advanced financial education.

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Bottom Line

Microfinance apps are the new-age pioneers of easy access to small credit. Everyone can benefit from microfinance and begin their journey toward financial independence, whether they are a self-help group, a small business, a person without a job, or someone with a poor financial situation.

The availability of loans “collateral-free” is one of the main features of microfinance apps! Therefore, microfinance apps are the best option if you’re just starting out in business and need help.

In addition to the advantages previously mentioned, microfinance apps are now even more diverse. Some just help you get loans and credit, while others help you save money and invest. No matter what you need, you can easily find the app you want!

One such microfinance app is the Money Club that aims to encourage people to establish saving habits. Besides, it provides the benefit of borrowing money in times of need. Not only that, you can also earn money by referring the app to your friends and family.

Download the Money Club App to

  • Save Money
  • Earn Money
  • Borrow Money

Through the unique network of verified individuals, Moneyclub – Friend in Financial Need provides a secure and reliable platform for members to lend and borrow money, share financial advice, and build lasting relationships. You can also join its social community Financial Saathi which is the first ever social network dedicated to helping members earn money, save money and support one another financially. Click on the link below to join Financial Saathi https://www.facebook.com/groups/financialsaathi

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