What is Micro Lending?

Micro lending is the provision of very small loans to those in poverty designed to encourage entrepreneurship. These individuals lack collateral, steady employment and a verifiable credit history and therefore can not meet even the minimum qualifications for access to traditional credit. Micro lending is a part of microfinance, which is the provision of a wide range of financial services to the poorest.

Micro lending is a financial innovation that is generally considered to have arisen with the Grameen Bank in Bangladesh. In that country, he has successfully enabled extremely poor people to participate in self-employment projects that allow them to generate income and, in many cases, begin to build wealth and exit poverty. Due to the success of micro lending, many in the traditional banking sector began to realize that these micro lending borrowers should more correctly be classified as pre-financing, thus, micro lending is increasingly mainstream credibility in the financial sector, and many traditional organizations for funding large are contemplating micro lending projects as a source of future growth, although almost all large development organizations discounted the likelihood of success of micro lending when it was started.