The Impact of Microfinance on Small Business Growth and Income Stability: Challenges and Opportunities

Abstract

Microfinance plays a crucial role in enhancing financial inclusion by providing accessible and flexible credit opportunities, particularly for low-income individuals and small businesses. This study analyzes the demographic trends of borrowers, with the majority falling within the 26-45 age group and earning above 100,000 ALL. This research adopts a quantitative approach, utilizing structured surveys administered to microfinance borrowers. Data was analyzed using descriptive statistical methods and graphical analysis was employed for visualization. The study highlights the importance of microfinance in business growth and income stability, suggesting that future strategies should focus on reducing interest rates, extending repayment periods, and enhancing financial access for underserved communities, particularly in rural areas. Findings indicate that a balanced proportion of borrowers reinvest in their businesses, primarily for expansion (37%) and technological upgrades (41%), while fewer focus on production increases (8%) and asset purchases (10%). Despite economic fluctuations, more than 50% of respondents reported stable income, with salary increases (61%) and trade activities (24%) as the main contributors to financial growth.

Received: 7 January 2025 / Accepted: 28 February 2025 / Published: 25 March 2025