What is MicroLending

mi·cro·cred·it (mī'krō-krěd'ĭt)
n.   The business or policy of making microloans to impoverished entrepreneurs. Also called microlending.

mi·cro·loan  (mī'krō-lōn')
n.   A very small, often short-term loan made to an impoverished entrepreneur, as in an underdeveloped country.

Micro-lending is a simple concept that has the power to change lives by granting the poor access to loans. Micro-lending arose in the 1980s as a response to doubts and research findings about state delivery of subsidized credit to poor farmers. The subsidized, targeted credit model supported by many donors was the object of steady criticism as most loan programs accumulated large loan losses and required frequent capitalization to continue operating. It became evident that market-based solutions were required. Dr. Mohammad Yunus of Bangladesh led the way with a pilot group-lending scheme for landless people.  He was inspired during the Bangladesh famine of 1974 to make small loans allowing borrowers to avoid predatory lending.  He made a list of people who needed just a small amount of money.  When the list was complete there were 42 names.  He was shocked to find total amount of money was only $27. This ultimately became Grameen Bank and now serves more than 2.4 million clients the majority of which are women who often use the income for education or improved nutrition.  This organization and its founder were jointly awarded the Nobel Peace Prize in 2006.  Since the 1980s micro-lending has grown substantially.