Difference between Traditional Financing and Micro-Financing
Traditional Financing Vs Micro-Financing
Microfinance | Micro credit
Management Notes
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. |
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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.
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