Financial Health of Microenterprises

Project background

Financial health is more than a simple metric of business success (e.g. profitability, secure cash flow, growth potential, etc.) Financial health is achieved when daily systems help build resilience and pursue opportunities. It includes the ability to meet financial obligations (e.g. bills, taxes, payroll) and  maximize the collectability of sales; access to funds to weather financial storms; and having a business plan that includes a cash-flow cycle, future expenses, and investment opportunities (among others). Financial health is, therefore, more than having the capacity to repay debt obligations. Having a tool for assessing the financial health of business clients will help financial institutions to assess their potential and to support clients to improve their financial position.

The MFC’s Financial Health Scorecard

The MFC’s Financial Health Scorecard is a system of indicators organized in five dimensions: financial standing, access to finance, financial management, stability and survival and revenue potential.

The tool for measuring the financial health is available online and consists of 24 questions. Each business wishing to assess its health can go through the set of questions and instantly receive the final score with the description how his/her business performs.

The Financial Health Tool is available here in English
It is possible to customize the tool to other language versions.

SME Financial Health Scorecard Summary

The paper presents the concept of financial health for small businesses and describes the MFC’s approach to constructing a comprehensive measure of financial health. First, the paper argues for the need to develop a measure of financial health for a small business that goes beyond traditional balance sheet and income statement-based financial indicators. Next, the paper consolidates emerging understanding of what financial health means, and proposes a new definition that captures key dimensions of financial health. This is followed by a discussion on the construction of the indicators and the methodological approach adapted for collecting data, which is based on “rules of thumb” rather than financial indicators. The paper ends with the discussion of the proposed methodology and its field applications.


Project status: active

Project regional focus: Europe and Central Asia

Project objectives 

The objective of the project is to assist MFIs to understand the financial health of microenterprises and to support them to improve it.

Key activities 

  • Development of a framework to assess the financial health of microenterprises
  • Testing the framework with MFIs
  • Presenting the final version of the tool for assessing the financial health of microenterprises