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Microfinance

How $100 loans to the unbanked create economic opportunity and lift millions out of poverty—the $150B+ market where finance meets social impact

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Social Impact Investing

The $100 Loan Revolution

A woman in Bangladesh borrows $100. She buys a sewing machine. Within 6 months, she's earning enough to repay the loan and feed her family. This isn't charity—it's microfinance. Small loans to people banks ignore, creating economic opportunity where traditional finance sees only risk.

Today, microfinance serves 140 million borrowers globally, with $150B+ in outstanding loans. The average loan? Just $200-500. Yet these tiny amounts drive massive impact: income increases of 20-30%, children staying in school, and entire communities lifted out of poverty. The question: can markets solve poverty, or is this just charity with paperwork?

The Problem: 2 Billion People Without Banks

Traditional Banking Says NO
• No collateral (land, car, house)
• No credit history
• Loan amounts too small ($100-500)
• Transaction costs exceed profits
• High perceived risk
But They're Not Actually Risky
• Repayment rates: 95-98%
• Social collateral (peer pressure)
• Frequent repayments reduce default
• Strong community ties
• Loan used for productive assets
The insight: Poor people aren't bad credit risks—they're ignored because banks can't profit from $100 loans using traditional branch-based models. Microfinance solves this with group lending, peer monitoring, and low-cost delivery.

Market Size: The $150B+ Microcredit Economy

Total Borrowers
140M
80% women, primarily in Asia/Africa
Outstanding Loans
$150B
Average loan size: $200-500
Institutions
10,000+
MFIs, banks, NGOs, fintechs
Geographic Distribution
Asia-Pacific65% (90M borrowers)
Latin America20% (28M borrowers)
Africa12% (17M borrowers)
Industry Growth & Evolution
1976 → 2000
Experimental Phase
Grameen Bank pioneers group lending. NGO-driven, subsidy-dependent. Focus: prove concept works.
2000 → 2010
Commercial Boom
IPOs, venture capital, rapid expansion. Compartamos IPO (2007). Growth: 10M → 100M borrowers.
2010 → 2020
Crisis & Correction
Andhra Pradesh defaults (2010). Over-indebtedness exposed. Regulation, client protection standards emerge.
2020 → Today
Digital Transformation
Mobile-first lending, AI credit scoring. Costs drop 50-70%. M-Pesa, Tala, Branch dominate.

💡Why Microfinance Matters

Financial Inclusion: Brings 2 billion unbanked people into formal economy
Women's Empowerment: 80% of borrowers are women (higher repayment rates, greater family impact)
Poverty Reduction: 20-30% income increase for borrowers, sustainable economic growth
Market-Based: Not charity—loans repaid at commercial rates, creating sustainable institutions