If you give out 50US loans are expexted to do due diligence and are onyl allowed to take 8% (4US) how should that work if you also have to cover for defaulting

If you give out 50US loans are expexted to do due diligence and are onyl allowed to take 8% (4US) how should that work if you also have to cover for defaulting loans and pay fo the capital you are providing. Luckily this is not really a problem since you return on investment should be closer to 1000% than to 100% (obviously your returns will diminish pretty fast as soon as your investment gets bigger). Therefore even interests rates of 50%+ shouldn't be a problem as long as it invested in income generating activities. If you are interested in that topic I wrote my master thesis about it: http://www.scribd.com/doc/92714/Microfinance http://www.scribd.com/doc/92714/Microfinance (partly a bit dated but the basic premise regarding interest rates should be still valid).