What is microfinance? How small-scale financial services work
By SendPay Business · · 2 min read
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Microfinance means financial services in small amounts for people on low incomes and for tiny businesses that mainstream banks often turn away. It covers small loans (microloans), savings, insurance and payments. It is often linked to Muhammad Yunus and the Grameen Bank in Bangladesh, which won the Nobel Peace Prize in 2006.
How microfinance works
- A microfinance institution offers small loans, often to groups or small traders.
- Borrowers repay in small, frequent amounts.
- Many lenders also offer savings accounts and basic insurance.
- Repaid money is lent out again to other borrowers.
Why it matters
Microfinance can help people start or grow a small business, cope with emergencies and build savings. It is one part of wider work on financial inclusion, which aims to give everyone access to useful, affordable financial services.
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Limits and risks
Interest rates on microloans can be high because small loans cost a lot to run. Some borrowers have ended up with too much debt, so responsible lending and clear pricing matter.
Where SendPay fits
SendPay lets you launch your own money app under your brand, with GBP, EUR and USD accounts, transfers, branded Visa cards, payment links, invoices and subscriptions, powered by licensed partners. SendPay isn't a bank and doesn't offer lending, so it doesn't provide microloans.
How it works
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- 2Choose what it does
- 3Launch when you are ready
Why sign up
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SendPay Business is a technology company, not a bank. Accounts, cards and payments are powered by licensed partners.
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Spotted a mistake or something out of date? and we'll fix it. How our guides are made
This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. Other companies named in this guide are reference points only and are not affiliated with SendPay Business.