Micro Financing refers to Financial aids such as loans, saving accounts and insurances provided to new ventures and small business who do not have enough funds to start their venture or business. They provide funds or Loans to owners of small business.
In the absence of micro financing, small business will not have any access to financial resources as they can hardly get capital from banks without collateral. They do not have resources to give as collateral. Further the interest rates of banking institutions are also high. At the time of starting of a business, people can not afford the burden of high rates. These small loans provided through micro finance helps the business owners to start their business. This also generates employment and provides job to many job seekers.