Microfinance is a practice of extending small loans to very poor people for self-employment projects. It has reached millions of households worldwide and can be found in both third world countries and European nations. Microfinance institutions (MFIs) often surpass the repayment rate of traditional lending institutions and exhibit promising risk/return ratios. The unmet demand for microfinance, estimated at around $250 billion, suggests that it is set to emerge as a significant new asset class. Microfinance fills the gap for reliable and affordable credit sources for small enterprises, particularly stallholders in developing world downtown areas. Microfinance programs provide not only basic loans but also savings facilities, training, and peer support. In developed countries, low-income clients demand additional services, and microfinance has evolved to meet these needs.
