What is group based lending?

Group-based lending is a financial model where small groups of individuals come together to access loans, often used in microfinance. Each member of the group typically guarantees the loans taken by others, creating a social pressure to repay and reducing the lender's risk. This model fosters mutual support and accountability among borrowers, enabling access to credit for those who may lack collateral or credit history. It is commonly used in developing countries to empower underserved populations and promote entrepreneurship.