What are the different types of microfinance organizations?

There are many kinds of microfinance organizations. Microfinance can occur through institutions such as banks, cooperatives and NGOs (NGO). There are also organizations based on specific communities to support their own financial development. This includes associations, credit unions, community banks and rotating savings and credit associations (Roscas).

Some non -profit commercial banks offer their own microloans or small short -term loans for individuals or low -income entrepreneurs who do not have collateral; These loans are usually associated with high interest rates. However, many commercial banks do not offer microlloans due to perceived high risks. There are also banks that will only provide microlloans if the loan has been guaranteed by a third party.

People living in a small community sometimes create their own community bank. Community banks sometimes provide loans to groups of about five people, a different difference from one individual. EligibilityEach member of the group for future loans then depends on the success of any other member of the group, a tactic that can support solidarity. Cooperatives are similar to community banks, but they do not necessarily have to be owned and operated by community members.

Cooperative credit unions tend to charge very low interest rates and provide loans to members of the unions from their combined deposits. In Roscas, smaller and usually interest -free variations at the backup cooperative, groups of individuals invest their financial resources in one member of the group at the same time. This gives each individual a rotation in investing a flat amount of money in his own project. So if every 12 people invest $ 5 (USD) one -off income per month in Roska, they could be provided with a capital of $ 60 for one month of the year.

There are also non -governmental organizations that could serve as microfiorganizationNance, in addition to offering related services in poor communities such as business and financial training. In fact, there are some non -governmental organizations dedicated only to facilitate micro -grouping inside and between countries. Several non -governmental organizations also offer the possibility of online micro -groups.

While many microfinance organizations have successfully helped people escape poverty, cases of exploitment and confidence abuse can and occur. When we focus on helping people through micro -traits, one should carefully explore several microfinance organizations and their success in really helping communities before investing resources. It is also possible to act independently of formal organizations of microfinance. With some suitable legal instructions, individuals can examine people or communities in need, create direct contact and negotiate their own conditions for investment or gifts.