This research deals with the influence of microfinance/microcredits on business development analyzing how micro finances affect establishment of small enterprises in Sweden. For the analysis, the following research questions were addressed: How do small enterprises get access to microfinances and what kind of businesses are established through microfinances? Microcredit means giving entrepreneurs access to financial resources to borrow a small amount of money to invest in income generating business activities context related. A model of microcredit was developed to lend money to the poor for business entrepreneurship. Access to microfinance can facilitate poverty reduction and incorporate economic and social development. Relationship based lending is affected by cultural and social context. Multiple case studies were applied for data collection from two small enterprises in Gothenburg, Sweden and a microfinance institution in Sweden. Qualitative data was collected in form of semi-structured interviews. Direct observation and documents were also used as data source. The study shows that microfinance contributes to development of sustainable enterprises and generates employment for people. The research shows that microfinance leads to sharing risks and financing projects in social enterprises, cooperative business and associations. It provides people with social networks, enhances their independence, empowers them and improves the quality of their life by generating incomes. It is important for the microfinance institutions to get recognition as important actors in the financial sector to succeed. The research contributes to the literature and theories of microfinances by developing a model about microfinances in developed countries. The limitation of the study is that we had studied only two small enterprises in a developed country. We suggest comparative studies on the influence of microfinance on business development and women empowerment between emerging economies and developed countries or between developed countries.

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