A microfinance loan is a small loan given to individuals or small businesses who typically do not have access to traditional banking services. These loans are part of a broader system known as microfinance, which includes savings, insurance, and financial training.
Small loan amounts – usually from a few dollars up to a few thousand.
Targeted at low-income individuals or small entrepreneurs, especially in developing countries.
Often used to start or expand small businesses, such as farming, tailoring, shopkeeping, or street vending.
May be provided without collateral.
Often includes group lending, where small groups guarantee each other's loans.
Accompanied by financial literacy or business training in many cases.