In order to grow and develop a micro business, just like any other business, you need to have capital.  But the formal financial institutions, such as commercial banks, savings and loan associations, finance companies, etc. have a tough time figuring out how to lend to the poor. The prevalent philosophy is that the poor don't have collateral guarantees for supporting any kind of a loan program. Common belief is that of the poor as not being credit worthy, or for that matter, of any capacity to sustain credit .  As well, current belief is that of the poor having very little to offer in order to obtain an otherwise very expensive small loan. It's not worth the effort, bankers will say, as the amount of paperwork necessary in order to give a large loan is the same as that for a traditional small loan. Consequently, proportionate costs are just not sustainable, or so will the "financially savvy" state.   As a consequence a poor business person will simply not be able to access a mere $200 or $300 to sustain a micro business. A secular knowledge states that a lot of the poor "don't have enough resources to maintain any kind of legal business ".  The poor live from day to day, striving to obtain the basic family needs, without hope to ever be able to breathe "a different kind of air" . 

 The idea behind the institutions that cater to the micro-entrepreneur market is to provide the poor people access to the necessary credit/capital in order to maintain their small businesses.  Microfinance does not mean "giveaway" or gift.  Microfinance does mean small loans, specifically designed as assistance to poor families in order to support their breaking the vicious circle of poverty.   

 The effectiveness of microfinance as a tool in the battle against poverty is by now a well known fact around the globe, both by the multilateral institutions, as well as the political and community leaders. Perhaps today's best known example of a microfinance institution is that of "The Grameen Bank " from Bangladesh, or as otherwise known  " Bank to the poor".  During 1974, an economics professor called Muhammad Yunus, now a Nobel peace prize laureate individual, started a small credit project for poor people in a rural village, close to the university where he taught economics. Three decades later, the Grameen bank works in more than 60,000 villages, and provides financial services to more than 6 million poor families in Bangladesh.  This "bank to the poor” has made small loans for a total of over $5 billion while maintaining a recuperation rate of over 98%. Recent studies have shown that over 50% of those who become members of the micro finance program held by the Grameen Bank, crossed the line of poverty within five years of their having taken their first loan .   

 Today there are over 160 institutions in more than 40 countries utilizing  the Grameen bank micro finance methodology , which has become the principal strategy in the fight against global poverty.