Who are the clients of microfinance institutions?

Low – income population having their own business, in most of the cases not having the access to other formal financial institutions, are the typical clients of micro - credit institutions.

These are usually self – employed entrepreneurs, performing their activities at their household. Their small business is focused on retail stores, street sale, handcraft production, agriculture, animal husbandry or the provision of all sorts of services.

Precise data on poverty of the clients are lacking, yet there are trends indicating that the majority of micro – financing beneficiaries is on the edge, above and below the poverty threshold. Financial services, particularly loans, are not always suitable to everyone. They are tailored to persons who have recognized the economic opportunity for generating profits, provided that they have the access to a satisfactory amount of money. Regardless of the way of using the loan, MFI may provide a long - term and stable access to money only if the clients are ready and able to adhere to the repayment schedules.

Most vulnerable households, around 10% of them, including also the poor ones, are not the traditional clients of micro – financing organizations since they do not have a stable cash inflow required for servicing the loan. They need grants or other public funding sources for the improvement of their economic situation. This is also the most efficient form of supporting this category of population, since the majority is not able to timely service the loans.