Microfinance primarily targets low-income individuals, including women, minorities, and those in rural areas, who lack access to traditional banking services. By providing financial resources, microfinance enables these individuals to start or expand businesses, improve their living conditions, and invest in education or health, thereby fostering economic development and poverty reduction.

Repayment rates for microfinance loans are generally high, often exceeding 95%. This high repayment rate is attributed to the strong community ties and the group lending model commonly employed by MFIs, where peers hold each other accountable.

Interest rates in microfinance can be higher than those in traditional banking due to the higher operational costs associated with servicing small loans and the perceived risk of lending to low-income individuals. However, these rates are typically lower than those charged by informal moneylenders. For instance, Zidisha, a peer-to-peer microlending service, offers loans at less than half the interest rates of traditional microfinance institutions.