Which program provides small loans to poor people, especially women, to encourage development of small businesses?

Which program provides small loans to poor people, especially women, to encourage development of small businesses?

• A. NAFTA
• B. microcredit program
• C. Special Economic Zones (SEZs)
• D. NGOs

Answer: (B)

Small loans to people who lack access to traditional banking are the defining feature here. Microcredit programs deliver tiny sums of money to individuals, often women, to start or expand small businesses. The idea is to provide flexible credit that enables income generation and entrepreneurship, even when formal financial institutions won’t lend. These loans are usually repaid in small, regular installments and may rely on social collateral or group lending to reduce risk, rather than requiring large collateral. This approach is powerful because it directly addresses the barrier to economic activity—access to credit—while also boosting household income and encouraging women’s participation in the economy. This isn’t about trade agreements, geographic zones with special incentives, or general non-governmental organization activities. For the specific goal of unleashing small business development through accessible credit, the program that fits best is microcredit.

Small loans to people who lack access to traditional banking are the defining feature here. Microcredit programs deliver tiny sums of money to individuals, often women, to start or expand small businesses. The idea is to provide flexible credit that enables income generation and entrepreneurship, even when formal financial institutions won’t lend. These loans are usually repaid in small, regular installments and may rely on social collateral or group lending to reduce risk, rather than requiring large collateral. This approach is powerful because it directly addresses the barrier to economic activity—access to credit—while also boosting household income and encouraging women’s participation in the economy.

This isn’t about trade agreements, geographic zones with special incentives, or general non-governmental organization activities. For the specific goal of unleashing small business development through accessible credit, the program that fits best is microcredit.