Microfinance organizations fill a niche that banks serve reluctantly: small amounts, short terms, simplified borrower assessment procedures. Speed and accessibility are compensated by significantly higher borrowing costs.
The difference in rates is explained by the risk and cost structure: borrower assessment is more superficial, the share of defaults is higher, and fixed costs are spread over small amounts. A rate that appears moderate when calculated per day or week turns out to be many times higher than a bank's rate on an annual basis.
The main danger for borrowers is not the rate itself, but the short term combined with rapid debt growth in case of default. A loan taken to cover a cash gap, if it cannot be repaid on time, can multiply many times over.
Practical rule: evaluate the offer based on the full cost of the loan on an annual basis and on the amount that will actually need to be repaid, not on the daily rate. Microfinance organizations are subject to registration and supervision, so the status of a specific company should be verified before signing a contract.