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Microfinance has proved to be one of the most powerful engines in the global effort to end the crushing poverty that deprives hundreds of millions of the world's people of sustenance and hope.
It is based on the idea that if you give a poor person a very small loan for use in a self-employment venture, you will get an amazing return on your investment. The borrower will not only work to end their poverty, but they will also improve the life of their family and strengthen their community.
Micro Finance programs have given many of the world's poorest people the opportunity to lift themselves out of poverty altogether. The increases in household income allow borrowers to provide greater quantities and more nutritious foods to their families, to educate their children and to improve their houses.
An equally important part of microfinance is the recycling of funds. As loans are repaid, usually in six months to a year, they are re-loaned. This continual reinvestment multiplies the impact of each dollar loaned.
Microfinance has a positive impact far beyond the individual client. The vast majority of the loans go to women because studies have shown that women are more likely to reinvest their earnings in the business and in their families. As families cross the poverty line and micro-businesses expand, their communities benefit. Jobs are created, knowledge is shared, civic participation increases, and women are recognized as valuable members of their families and communities.