How Are Micro Finance Institutions Helping Small Businesses During COVID-19?

Financial institutions consider underfunded rural women, low-income house-holds and small-businesses to be high-risk and high-cost, as transactions are often small and some clients are located in difficult-to-reach areas. The microfinance industry can break these barriers down. It stabilizes income flows for low-income households and allows them to save for future needs.

With more companies offering flexible microfinance services, the microfinance industry helps  small businesses prosper, cope and rebuild during crises. Following are five ways Micro Finance Institutions are helping to level financial playing fields for poor communities:

  1. Women’s Empowerment Through Micro, Small, And Medium Enterprises Financing

Women control an overwhelming number of micro, small, and medium-sized enterprises (MSMEs), therefore, providing them with better financial options will benefit women’s livelihoods and incomes.

  1. Access To Microfinance For Individuals And Businesses Outside Of Major Capitals

For regional towns’ small businesses to grow, they need financing sources to support their operations. In Georgia, over 60% of the population lives in secondary towns and rural areas, where small businesses and agricultural livelihoods can create jobs and raise incomes. The purpose of microfinance banks in Georgia is to help local companies develop outside of Tbilisi.

  1. Access To Financing And Education For Rural Women

Women in rural areas are being empowered to make good decisions and gain financial independence by accessing microfinance. People in rural areas of the People’s Republic of China (PRC) lack access to credit, especially women who seldom have the material assets nor the education needed to organize their finances.

A total of 121,000 rural poor women borrowers are targeted by microfinance institutions and are provided with microcredit as well as measures to improve their financial literacy and planning skills.

  1. Diversifying Economies By Nurturing Small Businesses

Mongolia’s natural resources account for 20% of its gross domestic product and 80% of its export earnings. 90% of the country’s registered businesses are MSMEs, and they generate half of all jobs. To support Mongolia’s effort to diversify its economy beyond mining, banks provide more funding to help these businesses expand.

  1. Aiding Women To Rebuild Their Livelihoods After Conflict

Armed conflict and persistent regional economic disparities affect women the most when communities are disrupted. The central and southern Filipino islands of Visayas and Mindanao have both been weakened by decades of economic stagnation, and the income levels have fallen far below the national average.

The nation’s largest microfinance institutions provide financial services to women who own micro-enterprises in these challenging regions, enhancing their access to finance and helping them build their economic base. The project gives women better access to credit so they can improve their living conditions and rebuild their communities.

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