Microfinance

Microlending generally refers to relatively small institutional loans provided to individuals by banks, credit unions, and nonbanking financial [Page 2262]organizations. It is a distinctive, recently created model in which loans are not secured against default by collateral or property title. The loans are of small value (usually from $50 to $1,000 when provided within developing countries) and typically involve regular weekly-to-monthly payment schedules over periods of 6 months to 2 years. Conventions for naming subclasses of microlending vary. In this entry, microcredit refers to nonprofit microlending, including government-sponsored schemes. Microfinance refers to for-profit microlending, in which returns are distributed to the owners of the lending business. Ethical appraisal of microfinance offered to support new and continuing microbusinesses among the poor is the main focus of ...