The perception of micro finance loan borrowers on the effects of loans on their businesses and as a poverty alleviation tool
Maghanga-mtuweta, F M
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The study sought to establish the perception of Micro Finance Loan Borrowers on the effects of loans on their businesses and as a poverty alleviation tool. It also sought to establish the perceived adverse effects on businesses of interest charge on the loans advanced by MFIs. The study established that though the loans were perceived to have improved the businesses, the state of businesses before entry into an MFI credit scheme was not bad. The respondents thought their business were not in very bad shape before entry into a credit scheme. This can be explained by the fact that none of the businesses interviewed had received start up capital from an MFI, 93% used own savings and partners’. Further, regarding the perceived effectiveness of Micro Finance Loans as a poverty alleviation Tool, though the respondents perceive their welfare to have improved they did not consider themselves as poor before entry into an MFI credit scheme. The study also established that the interest charge on MFI loans was perceived to have very little effect on the performance of the businesses. The study concludes that the loans advanced by MFI are perceived to have a positive effect on the businesses and as a poverty alleviation tool. The interest charge is not perceived to have great adverse effects on the businesses.