Difference between Traditional Financing and Micro-Financing
Traditional Financing Vs Micro-Financing
Difference between Traditional Financing and Micro-Financing:
Traditional financing generally means a loan or line of credit secured through a financial institution under conventional terms, usually based on the “four Cs”: character, collateral, capital, and capacity.
Microfinance is a type of banking service that is provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services.
Some of the major difference between Traditional Financing and Microfinancing are as follows:
Traditional Financing |
Micro Financing |
| Traditional Financing is Collateralized and people need to keep properties like land,building,gold,etc for taking debt or loan. | Micro Financing is Non Collateralized as there is no need of collateral for taking small debts or loans for the poor. |
| Traditional Financing is single or unit based financing. | Micro Financing is group based financing. |
| Traditional Financing can place from small to huge amount. | Micro Financing is always of small amount. |
| Traditional Financing contains generally cheap interest rate. | Micro Financing contains relatively high interest rate. |
| Traditional Financing is done for the personal or business motive. | Micro Financing is generally done for the upliftment of livelihood of poor ones. |
Similarly, Other related Topics:
- Fixed Asset turnover ratios
- Assets Turnover ratio
- Direct Financing Lease
- Different Types of Lease
- Need For Microfinance
- Open Ended Vs Close Ended Mutual Funds
- Liquidity Ratios
- Theories of term structure of interest rate
- Determinants of Market interest rate
- Difference between Nominal and Real Interest rate
- Cash Reserve Ratio Vs Statutory Liquidity Ratio
- Difference between Forward Contract and Future Contract
- Difference between ROA and ROE
- Federal Deposit Insurance Corporation
- Difference between Fixed Deposit and Certificate of Deposit
(Founder of Management Notes)
MBA,BBA.
I am Smirti Bam, an enthusiastic edu blogger with a passion for sharing insights into the dynamic world of business and management through this website.
I hold a MBA degree from Presidential Business School, Kathmandu, and a BBA degree with a specialization in Finance from Apex College,
MBA,BBA.
I am Smirti Bam, an enthusiastic edu blogger with a passion for sharing insights into the dynamic world of business and management through this website.
I hold a MBA degree from Presidential Business School, Kathmandu, and a BBA degree with a specialization in Finance from Apex College,
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Very beneficial information for and very authentic. I also like the way in which you differentiate in 2 collums. Very well work.
Thank You!!
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