Micro-finance Institutions (MFIs) provide support to very small businesses that do not qualify for bank credit, largely due to the size of the loan required, lack of track record and the loan security.

They include mainly micro and small enterprises (MSEs) — businesses at the early or growth stage, owned by individuals, women, or community groups and often informal.

The institutions may be Cooperative Societies and SACCOs, government programs, Microfinance Banks, community organisations and mobile money platforms., 

They provide loans in small amounts, with innovative minimal collateral, including group lending and joint guarantee and simple procedures and repayment terms. They also provide capacity building or training for borrowers.

Initially, services included only micro-credit. Microfinance now offers services offered by banks, including credit, savings, insurance, and money transfer services, but excluding checking accounts.

The loans are, however, normally short-term and not suited for financing long-term assets.