DEFINITION of 'Microcredit'

An extremely small loan given to impoverished people to help them become self employed.

Also known as "microlending" or "microloan".

BREAKING DOWN 'Microcredit'

Renee Loth wrote an article in 2002 for the Boston Globe entitled "Women Entrepreneurs," which explores how this type of loan possibly originated. In the article Loth suggests the system started in Bangladesh in 1976, when an economics professor loaned a group of women $27 to finance their own small business. Amazingly the women repaid the loan and were able to sustain the business.

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