Microfinance progressively came to be perceived as a mechanism toward inclusive development, especially in developing economies where a growing number of small businesses have problems garnering credit through traditional banking means. This article analyzes the manifold ways through which microfinance supports small entrepreneurial ventures in their economic upliftment and in fostering independent capital. In bridging these vital funding gaps and assisting in sustainable development, microfinance institutions (MFIs) give financial services to the underserved, including women and rural entrepreneurs. However, high-interest rates, over-indebtedness, and poor scalability need to be attended to for securing long-term sustenance of these programs. Using case studies and empirical evidence, the article attempts to establish the effect of microfinance on economic empowerment and poverty reduction.