Extending credit and savings services to the poor
The benefits of having access to credit services may not be be so obvious to most Americans. After all, our country is rich in accessible resources to advance your education and career or to pay off debts. Want to become a nurse, but have no savings to pay for your training? Get a student loan. Have an expensive medical bill after you broke your leg? Ask the hospital for a payment plan you can afford. However, in poorer and highly populated nations, they haven't been able to keep up with social and economic needs. When a financial emergency strikes someone so poor they barely have enough food to survive, where will they get money?
Microcredit companies envision a world where even the poorest of the poor can easily apply for credit and receive resources to help them improve their income and assets. In addition to offering the world's adults with practical money skills, the next step is encouraging the participation of children.
MFI's offer more than just loans
The majority of microloan borrowers only need a small cash amount to build their business or to pay for an immediate home improvement. However, most microfinance service providers, unlike traditional banks or loan sharks, are deeply rooted in the communities they serve and provide a hands-on, pro-active approach. These companies are located in or near their client's communities, the people who work for the MFI's are locals, and the programs created are based on local interests. Some MRI's even work closely with local businesses to offer affordable career and skills training in addition to financing. With access to finance and training, a low income person now has an opportunity for advancement without incurring heavy debts.
When the world became a more global community in the past 15 years with the dawn of the technological era, the microfinance industry exploded. Not only can borrowers benefit, but lenders investing in this banking system do, too. Increasingly, investors are interested in ventures which receive a social return as well as a capital gain. What if they invested in an MFI and could possibly help an impoverished person, their family, and/or their community? This modern financial arrangement creates a new social and economic environment that has offered millions a way to improve their economic security and increase their understanding of how to manage and minimize financial risks. Sounds like a win-win, right?