Micro Financing

What is the meaning of micro financing

Micro financing refers to financial support (usually small investments) provided by lenders to businesses — typically small-to-medium enterprises (SMEs) or startups. This financial support is intended to help the new business get on its feet, grow, or maintain operations. 

Unlike traditional banking, micro financing does not normally require collateral and often features:

• Shorter Repayment Terms: Typically ranging from a few months to a few years depending on the platform to cater to specific business needs.

• Flexible Eligibility Criteria: May consider business viability and future cash flow alongside credit history.

• Faster Application Processes: Lending platforms typically offer faster and more convenient application processes compared to traditional institutions.

• Shariah Compliant: Some platforms offer micro financing options that comply with Islamic principles for financing, catering to a broader audience.

In short, micro financing is a valuable financial tool to empower individuals and foster economic development by enabling easier access to financial resources for SMEs in Malaysia.