I think "the people who most need credit often just to make ends meet" fits into that first bracket. Anyone who's drowning just trying to keep up with absolute essentials needs help, not loans. If you can repay a loan then you can save. And if you can save, you shouldn't take out a loan.
Possibly "make ends meet" was a bad choice of words... there appears to be a gap between raw subsistence and the beginnings of social mobility that is quite hard to bridge. That's the spot that microfinance is aimed at - the great majority of these loans are used as seed money to begin/expand microbusineses.
> If you can repay a loan then you can save. And if you can save, you shouldn't take out a loan.
I wonder if you give this advice to people thinking of taking out a mortgage to buy a house. Or getting a loan to expand a small business. Or buying anything else on credit. It's quite easy to formulate the idea that poor people don't deserve credit, particularly when credit for you is so available you can't really imagine what it would be like for it not to be available.
There is quite a romantic idea that ignores many realities that if everybody works hard and saves their money they can "make something of themselves" and possibly give their kids a better life. The problem is that in many parts of the world if you work hard and save your money you may - if you are lucky and healthy - manage to stay in the same spot or else move imperceptibly up or down a degree. I don't think that's fair.
Unless you need the loan to generate income. Then you cannot first save (or it would take much longer)
Take the example of needing $ 100 to setup a small restaurant. You probably need tables, kitchen equipment and some ingredients. After you have those you can start selling food and over some time pay back the loan. Once the loan is paid back you have more profit leftover for yourself. So you've become less poor and more able to provide for your own future.
then they are not taking out a loan to make ends meet, but to start a business.
If they are borrowing money for food, and hoping to make it back in the future by working - that's making ends meet. And i agree, in this case, that they need help, not loans.
