NORTHFIELD, Minn. -- Micro-finance provides small amounts of money to local entrepreneurs. These borrowers often have been turned away by commercial banks. They may lack the necessary capital to support business development and business growth.
Muhammad Yunus first lent out $27 to 42 stool makers in Bangladesh in 1976. In doing so, he planted the seeds of the Grameen Bank. The bank has become a symbol of success for micro-credit.
Micro-finance programs are meant to not only alleviate poverty. They empower and inspire the individual entrepreneur. The community benefits from the product or services of the entrepreneur.
Across the globe, people are jumping onto the micro-financing bandwagon. There are some examples in the United States. Why not start an effort in your community?
Micro-Finance Leader
I am part of a philanthropic group of women now making micro-finance capital and support available. We focus on women and children who are entrepreneurs. And, we leverage our membership of more than 300 women as a community of support.
One inspiration to get this new effort going is the story of the Tile Lady. She had worked for many years as a tile layer for a small business. She does fabulous work. Then her employer, the tile business, closed.
How could she continue to use her skills? Get beyond unemployment? How about starting a small business as a tile layer?
The Tile Lady needed to buy her own tile cutter for about $750. She did not have a positive credit history or savings. None of the lending institutions’ she approached would help her to get started.
One talented tile layer, with customers who wanted to pay her to work, could not use her skills.
This story of the Tile Lady was told to us by Megan. She is a bright young woman who works as a small business consultant. Our group is contracting with her organization to operate the micro-finance program.
The organization provides small business loans of $2,000 and more. Our group wants to serve the small, small business (under $2,000). Technical assistance and business planning assistance also is provided.
If all goes as planned, the micro-finance program will be fully funded and begin in January. We are halfway to our funding goal and have not launched our formal fundraising campaign. We have found lots of people who want to get a micro-finance program going in our community.
The Grameen Bank has grown considerably since its inception in 1976 and is now estimated to have more than 5.5 million members and more than $5.2 billion dispersed in loans. Additionally, micro-finance has expanded worldwide, and there are now estimates of between 1,000 to 2,500 micro-finance institutes worldwide spanning more than 100 countries.
If we can help the Tile Lady and others like her who have skills that are not able to be used, I will be happy.
Please comment: If your community offers micro-financing, what results are you seeing?
Special thanks to Martha Rogers for sharing her paper "Micro-finance: An Overview and Applications to the Northfield Community."
For more information about micro-financing, see:
Andranovich, Greg, Modarres, Ali, & Riposa, Gerry. (April 2007). Community banking and Economic Development: Lessons from Los Angeles. Community Development Journal, 42 (2)
Sengupta, Rajdeep, & Aubuchon, Craig P. (Jan/Feb 2008). The Microfinance Revolution: An Overview. Federal Reserve Bank of St. Louis Review, 90 (1)
Photo: Just Invested
Leadership development consultant Donna Rae Scheffert has 30 years of experience providing concepts and tools to propel people toward their goals more easily, faster and with more fun. Sign up for a RSS feed and read more from Donna Rae at Online-Leadership-Tools. Follow Donna Rae on Twitter or LinkedIn.
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