Our Work

Q: Why is it called microfinance?

A:

It’s “micro” finance with “macro” impact. One out of five people struggle to live on less than $1 a day. But a loan of $50 can make the difference between abject poverty and survival. Creating a successful small business generates on-going income for food and shelter for the family and funds for children to attend school.

Q:How does microfinance help people?

A:It helps people help themselves. Loans to start or expand small businesses help the poor raise their standard of living under their own management and initiative. Credit to the poor provides a hand-up, not a handout – helping to restore hope and protecting dignity while improving well-being.

Q:How effective is this type of banking for repayment of loans?

A:Members bank on each other. Community banks borrow a lump sum during fixed cycles and distribute smaller increments to each bank member. The guarantee on the loan is the high degree of peer pressure among members to assure that all pay back on time. In the case that one member defaults, the others members must cover the deficit to ensure access to another loan cycle.

Q:What are the benefits for families involved in microfinance?

A:Small loans are direct deposits against hunger.  When mothers earn an income, the whole family benefits. This increased capacity to buy more food improves the family’s diet, making them less vulnerable to disease and death.

Q:How effective is microfinance compared to traditional aid programs?

A: It breaks the cycle of poverty. In developing countries more than half of the population survives by working in small-scale businesses or microenterprises. Access to credit enables the poor to transform their own communities. And because the model is replicable and the money is recycled, community banks can cost-effectively reach far greater numbers of people than traditional aid programs.

Q:Does microfinance create self sufficiency?

A:Yes. Bank members don’t need to receive loans for a lifetime. Many “graduate” after a few years with healthy businesses that rely on their own profits for continued growth.

Q:What do microfinance members learn?

A:Members learn while they earn. Bank members learn skills that improve their businesses and personal lives. They elect officers, keep records, budget their incomes and savings, and share marketing strategies. Some groups add health education to their weekly meetings.

Q:Is microfinance a safe way to save money?

A:Yes. Commercial banks require such high minimum deposits that the very poor are locked out. When banked collectively, precious savings are protected from theft, exploitation and natural disasters. Savings plans in community banks often give people the opportunity to save for the first time in their lives.

Q:How does microfinance affect the community as a whole?

A:It builds more than small businesses. By providing mutual support and encouraging individual empowerment, community banks build stronger families and strengthen civil society. Members often use their new skills to build up community organizations and their churches.

Q:Does microfinance become self-sustaining?

A:Yes, community bank programs have the potential and goal of becoming self-sustaining. The interest charged on loans helps finance program operations and provides continued capital to make loans available to new communities.