When we consider the options for making available increased amount of finance to be used as capital by women entrepreneurs, microfinance easily comes to mind. In fact it is proven to be the most helpful and hence popular too. There are many success stories of women who started their business with help of micro financing in developing and developed economies. The function of microfinance need not remain confined to provision of only credit but should also encompass other essential banking services like making deposits. Even today, women in many parts of our world are unable to access any banking service.
Making capital available for women also makes better business sense for those associated with microfinance, given that women are able to repay their loans in a far better manner than men. As per a report from the World Bank, 98% of women borrowers repaid their loans, compared to seventy percent of men. Grameen Bank was among the first few banks to have realized that fact and that is why the bank disburses 94% of its loans to women alone. Other than that it is realized that extending loans to women is proving helpful in bringing useful changes at social level like more children going to school, healthier diet for the family and general improvement in their quality of life.
The most important consideration for organizations inclined to offer loans to women is to devise their schemes in a manner that best suit the requirements of women. For instance, they could design loans which women can access for businesses that they can conveniently organize from home. Such loan agreements need not necessarily be signed by the spouse of a woman borrower. This is a practice often supported by PCI, at http://www.pciglobal.org/microfinance/
At present there are many cultural and social limitations in many societies that come in the way of women from understanding and deriving benefits of micro financing. Many have no access to the relevant information, particularly in African and Asian countries where the rate of literacy is too low.
It will be a good idea for the lending institutions to overcome some of the limitations by extending loans to groups of women, rather than to a single woman. The group may comprise of literate women along with those with some special skills or facilities with the educated ones guaranteeing repayment of loans on behalf of the others from the group. Once again, the idea of group lending originated with Grameen Bank and has even higher rates of repayment as women motivate and guide each other to do well in business as and when the need arises.
Lending capital to women through micro financing should be looked at as a big business opportunity that also has the potential of helping the working poor to come out of poverty. The data already available should encourage organizations connected with micro financing to consider the offer of providing funds and credit to women as low risk plans, which allow them to shoulder some social responsibility too, the effects of which will be realized in the long run.
