Financial Glossary

Microlending

Definition

Microlending refers to the practice of providing small loans to individuals or businesses, typically in developing regions or for underserved populations.

Related Services

Microfinance institutions, community development banks, and social impact organizations provide microlending services to support entrepreneurship and financial inclusion.

Problem and Application

Microlending can help foster economic growth, but the loans are often small and may come with higher interest rates to cover the risk of lending to individuals without credit histories.

Conclusion

Microlending supports small-scale entrepreneurs, contributing to economic development and financial inclusion, but requires careful management to ensure repayment and sustainability.