Understanding Loans and Microfinance

Why do banks prefer to offer larger loans?

• They have more money to lend.

• Larger loans are less risky.

• They earn more interest on larger loans.

• Larger loans are easier to manage.

What is the primary purpose of microloans?

• To buy luxury items.

• To invest in the stock market.

• To start or grow a small business.

• To pay off other debts.

How do microfinance institutions support small business owners?

• By reducing interest rates over time.

• By giving grants instead of loans.

• By offering business training and advice.

• By providing free products.

What is a key characteristic of debt financing?

• It requires repayment with interest.

• It involves giving away equity.

• It is only available from banks.

• It is a form of donation.

Where do most people typically get loans from?

• Friends and family.

• Online crowdfunding platforms.

• Banks or microfinance institutions.

• Government grants.