Don't worry, you weren't the only one thinking it!
At Arizona Microcredit Initiative, we get this question ALL the time. And for good reason: The definition of microfinance can change depending on who you ask!
Let's start with the basics. Microfinance is lending small amounts to people who don't have access to traditional banking institutions. This could be because their income is too low, they have a low credit score or perhaps they just live somewhere in the world where banks aren't easily accessible.
The goal of microfinance is to provide the opportunity for people to build sustainable businesses and become financially self-sufficient. And when individuals are financially self-sufficient, whole communities and local economies benefit.
This concept of microfinance was pioneered by Muhammad Yunus after he began to notice the positive impact microloans had on poor populations. He founded the Grameen Bank to provide microloans in Bangladesh and went on the win the Nobel Peace Prize. Read more about his work here.
The standard size of a loan depends on whether we're considering domestic microfinance or international microfinance. Internationally, microfinance loans can range from $10 USD to more than $5,000. In many parts of the world, $500 can go a very long way to help an entrepreneur start or grow a business. In the United States, microfinance lenders typically offer microloans from approximately $500 to $10,000 with interest rates below the industry standard.
At Arizona Microcredit Initiative, our mission falls exactly in line with the mission of microfinance as a whole. We work to empower entrepreneurs to start or grow businesses through our threefold focus on business instruction workshops, consulting and loans.
Our loan program is designed to benefit entrepreneurs at any stage of business development, from startup to expansion. During the term of every loan, we consult with clients one-on-one to discuss business challenges and implement solutions. We also offer two different loans designed for startups or existing businesses.
As a 501(c)(3) nonprofit, our goal is NOT to maximize interest collected. We aim to make our loans as accessible as possible and to help every business succeed by working with our clients.
We believe in supporting small businesses and we understand the challenges many entrepreneurs face when starting businesses. We're here to help.