Microlending

Microlending refers to the practice of providing small loans to individuals or businesses that typically do not have access to traditional financial services, such as loans from banks. These loans are usually offered by microfinance institutions, nonprofits, or online platforms and are often aimed at supporting entrepreneurs in developing countries or underserved regions. The goal of microlending is to provide financial support to individuals and small businesses that may not qualify for conventional loans due to lack of credit history or collateral.

Microlending typically involves small loan amounts, often under a few thousand AED, and the loans are used for purposes such as starting a small business, expanding an existing one, or improving livelihoods. The interest rates on microlending may vary, but they are generally higher than traditional bank loans due to the increased risk associated with lending to underrepresented borrowers. Despite the higher risk, microlending is an important tool for empowering individuals and fostering economic growth in emerging economies.