What is microfinance? How small-scale financial services work
By SendPay Business · · 2 min read
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.
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.
Build it
Create your own financial platform.
Pick a template, name it, brand it, preview every page before you pay. Your brand, your users, your fees.
Build my platform →Questions people ask
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Flat rate to APR calculator →What would a loan cost each month?
Work out repayments and total interest.
Loan repayment calculator →What is a savings circle?
A group that pays into a pot and takes turns receiving it.
Savings circles →How is a credit union different from a bank?
Credit unions are owned by their members.
Credit union vs bank →What is a remittance?
Money a person sends to family or friends in another country.
Remittances explained →Read next
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. PayPal, Patreon and Substack are named as reference points only and are not affiliated with SendPay Business.