Difference Between Microfinance and Microcredit
What do you mean by microfinance?
Microfinance is the process of extending financial services to those people who have low income and it becomes hard for them to get finance from the banks and other private money lenders. The living standard of the poor and the people having no jobs can be improved with the financial practice of microfinance. Simply, Microfinance means the broad spectrum of financial services such as loans, insurance, savings etc. provided to the people of low-income groups.
Microcredit
Microcredit is an aspect of microfinance which includes all types of loans that financial institutions, such as banks and insurance companies, provide to poor or unemployed individuals.
What is the purpose of microcredit?
The purpose of microcredit is to make the people self-employed as it is a small amount of loan that is provided with a low-interest rate to the people who are below the line of poverty.
Difference Between Microfinance and Microcredit
Some of the major difference between Microfinance and Microcredit are as follows:
| Basis |
Micro-credit |
Micro-finance |
| Definition | Micro-credit is the small loan facility provided to the people with less earning, to motivate them to become self-employed. | Micro-finance refers to the number of financial services provided to the small entrepreneurs and enterprises who cannot take shelter of banks for banking and other services. |
| Services | Micro-credit includes only credit forms of activities. | Micro-finance includes credit activities and non-credit activities like savings, pension, insurance, etc. |
| Component | Micro-credit is an aspect or we can say a component of microfinance. | Microfinance is a whole concept. |
| Need | Micro-credits are small size loans with shorter repayment periods. They are granted for small-scale activities that direct to serve local needs. | Microfinance services help to low-income individuals and start-up in developing countries to start running a small business, increase assets, diminish risk, raise productivity, increase return on investments, increase incomes, improve access to education and eventually increase the welfare. |
- Goals of Financial Management – Profit Maximization & Value Maximization | Financial Management
- Key elements of Organizational Behavior – People, Structure ,Technology & External Environment | Organizational Behavior
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,
- Multi-Channel Inventory Management: Strategies, Tools, and Best Practices for Success - March 26, 2025
- Channel Management: Strategies, Best Practices, and Importance for Business Growth - March 25, 2025
- Benefits of Telecom Expense Management – 8 Major Benefits Explained | Telecom Management - March 21, 2025
Welcome
whoah this blog is wonderful i love reading your articles. Keep up the great work! You know, a lot of people are looking around for this information, you can help them greatly.
Thanks.
I am working or a newly established microfinance in my country and I will really a proper guardance.