What you need to know about the difference between microcredit and microloans

What is the difference between microcredit and microloans? This is a doubt that many people have，today，Hong Kong Xintong-tell you what is the difference between them，Let’s learn together! one、The main business is different. Generally speaking,，Microfinance refers to the use of banks as intermediaries、A general term for credit activities with deposits and loans as the main body，including deposit、Loan and Settlement Business。

So it should be understood as：Microcredit includes two businesses: loans and deposits，And microfinance is just one of the businesses：lending money。two、

Application conditions

Unlike traditional bank micro-loans, borrowers usually need to provide a series of formal documents such as mortgages or guarantees.，Such as the income statement that reflects the financial status of the company、balance sheet，Or personal salary certificate, etc.，And these

Require

For many low-income people，is unsatisfactory。

The loan methods of microfinance are different from those of bank microloans.，It was after on-site investigation，Analyze the borrower's credit and expected future income to determine the loan target，Compared with the bank's small loan method, it will be more flexible and changeable.。

three、The annualized interest rate is different from the expected annualized interest rate of the loan.，I believe there is no need to say more，Anyone with some economic knowledge should know that the expected annualized interest rate of microfinance loans is higher than the expected annualized interest rate of small loans from traditional banks.。This is because：Microfinance does not require borrowers to provide collateral and collateral，Therefore, the credit risk borne by lending institutions is relatively large.，Under strict risk control，It is normal for the expected annualized loan interest rate to be relatively high.。

Four、The service targets are different. Most of the customers of small loans are concentrated in various formal enterprises and working-class individuals.，These customers usually have more formal documents proving their creditworthiness.，Such as financial proof、Pay stubs, etc.，At the same time, the geographical distribution of its customers is relatively scattered.。Microfinance clients are low-income business owners、Own a home business in its early stages、Mainly farmers, etc.。

These clients usually don’t have much formal documentation，Customers are mostly located in specific geographical areas。five、Summary: The application threshold for microcredit is relatively low，The lending speed is also faster，But the loan amount and loan interest rate may be higher.。Which one to choose specifically?，It’s up to everyone to choose based on their actual situation.。If you still need to know more about this，You are welcome to consult Hong Kong Xintong at any time!

About Hong Kong Xintong

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