Microcredit is the "new wave" of development the small loans are a solution to encouraging self-reliance.
Microcredit has enabled extremely poor people to take on self-employment projects it helps people become self-reliant.
There are several advantages for example, it generates income, builds wealth and ends poverty.
Due to the success of microcredit many in the traditional banking industry have become fans of it.
Microcredit is based on a separate set of principles which are different from general financing or credit.
Microcredit encourages (1) building the business (2) employing more people (3) building trust and (4) getting people through difficult times.
The expectations are (1) the person will start a business (2) the person will grow the business (3) the person will employ others and (4) the person will repay the loan.
A loan is not made in the form of a single loan but as a group of several smaller loans.
The entrepreneur receives a low-interest loan to build a business however, the person does not build a credit history with a bank.
Some microfinance organizations are Kiva, California, World Vision, Washington, MicroLoan, London ACCION, Washington, D.C .
advantages (n.) – good points; something that helps you to be more successful
builds wealth – makes and saves more money
credit history – a record of trust in repaying loans
development (n.) – the process of becoming bigger, better, stronger, or more advanced
employ (v.) – hire, offer a job to a person
entrepreneur – person who borrows money to start a business
ends poverty – stops the situation of being poor
financing (n.) – the managing of money by large institutions and businesses.
generates income – makes money to live on
industry (a count noun) – businesses that produce a particular type of thing or provide a particular service
loans (n.) – an amount of money that is given with the expectation of repayment
low-interest – amount charged a to borrow money
microcredit (n.) – the lending of small amounts of money to help people start small businesses (in poor countries)
new wave – popular new way
principle (n.) – a basic idea, plan or system
project (n.) – carefully planned work; something a person works to build or create
self-reliance (n.) – able to do things by oneself, without depending on the help of others
trust (n.) – a strong belief in honesty and goodness