Microfinance also known as Microcredit, is one of the banking services that looks into financial needs of unemployed or low- income individuals and groups. Although many institutions in the microfinance sector offer financial assistance, others tend to offer additional services like business education, saving accounts or even micro-insurance products. However, the main aim of Microfinance is to assist low income earners in getting a source of livelihood by using UAN Login.
Poor people in the society have being going through a lot since they lack the finances needed to live a comfortable life. You will therefore find many people having to make do with tormenting times before bringing food on their table. Fortunately, microfinance has come as good news to the poor since it has now become easy to access short and long term loans. Before the introduction of microfinance, the poor could not get financial assistance from banking institutions since most do not have collateral. This was quite disturbing as one could not start a business due to lack of funds. Things changed with the introduction of Microfinance Institutions as they had the helping hand needed by poor people to start or boost their businesses.
Microfinance allows people access to reasonable small business loans in a way that is in line with ethical lending practices. Actually what it does is offer loans while considering the financial muscle of applicants. Through this action, applicants are able to get loans at fairinterest rates. Despite the fact that microfinance exists all over the world, it is very common in developing countries and mostly seeks to help women.
Making use of microfinance does not necessarily mean that you are applying for a loan. This is because they not only offer financial assistance but also give education on how to get the most out of your business. In many scenarios, people seeking assistance from microfinance institutions will first have to go through a basic money management class. These classes cover issues like how to handle debt, savings account work, concept of cash flow just to list a few. Once educated, you can proceed to applying for a loan.
The main beneficiaries of services are usually women and groups. This is because they tend to repay the loaned amount within the stipulated time frame as opposed to men. People who are in groups are at an advantage since other group members will assist a defaulter in clearing the loan so that they can get an increased loan limit. By sharing the burden, group members assist one another in fighting poverty.
Despite the fact that there are a lot of arguments concerning the efficiency of microfinance in reducing poverty, it is true to say that it has really helped many people around the world. People can now start and operate their own business since they have the required capital. However, microfinance institutions need to consider the interest rates if they are to alleviate poverty completely. This is because not everyone can be able to make do with their interest rates thus keeping off.