In its simplest form microfinance is the practice of extending small loans, checks, or savings to people who don't usually have capital access.
Microfinancing can be a way for many people to become financially independent and economically stable. These individuals can then improve their living standards.
Here are some additional benefits of microfinance for the Philippines.
A. It allows individuals to provide better for their families
As mentioned, microfinancing is a way for people and their families to have a better life. It allows for greater resilience in developing countries. It takes just one negative event to make someone fall into poverty, even if they've managed to escape it. These people can prevent this from happening by using microfinance.
b. It allows people to get credit.
If a person is not eligible for a loan, the bank will not approve them. These situations are considered a risk by banks. These situations leave those living in poverty with no choice. Microfinance can be used to help people get even small amounts of money, which can reduce or stop poverty.
c.) Attributes importance to individuals that are often overlooked in society
Microloans are most often received by women. Microfinance products are also available to vagrants, the unemployed, and people with disabilities. This will help them jump-start their lives and steer them in the right direction.
It is a long-lasting process
Because microloans are usually small in number, there is little risk of them being declined. Even a small amount of capital can make a big difference to those who are in greatest need. They are easy to repay over time because they are so small.
Microfinancing allows entrepreneurs in developing countries to create opportunities for employment. More jobs can lead to economic revival. The economy benefits, as local businesses generate more revenue.