Access to credit is a significant barrier to entry for many entrepreneurs, especially in the developing world. Often, people cannot afford to start or expand a business because they have no access to capital. With microcredit, this gap is bridged and entrepreneurs in the developing world can have access to capital. This helps to encourage such individuals to open business, or to expand their business.

Beyond the financial aspects, the psychological aspects of microcredit also are important in fostering entrepreneurial activity in the developing world. Entrepreneurs, who previously knew little support, are likely to respond positively knowing that there are people who believe in their abilities, their integrity and their business model. Sometimes just knowing that people have faith in you can help your motivation to work harder and build the business. Knowing that further capital can be acquired down the road if need be is also critical, because it...
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