"Do not wait for leaders. Do it alone, person to person." Mother Teresa
MICROFINANCE
A $55 loan will enable a village woman to put more food on her family's table, grow her business, or send a child to school. The Village Net provides access to microloans as an entry point to a village. Working with the women to enable them to access financial support creates a speedy relationship and provides immediate results. From that foundation, The Village Net identifies resources to respond to other village needs as they are prioritized by the borrowers.
The loan program is a peer-lending model that is offered within an existing women's association. As members of the village association, the women are eligible for loans. They generally have existing businesses, but struggle to make profits. The women apply for loans in groups of about 5. They each guarantee the loans of the others in their group; no other collateral is required, although the women's association provides an additional level of guarantee by collecting dues that may be used in case of default situations. The loan cycle is 16 weeks, with a two-week grace period at the front of the repayment period. The loans start at very small amounts (about $55 US), but increase as loans are repaid according to requirements. The cycle will take a woman to about $250 US, at which point alternative loan sources may be used. At WomensTrust, those borrowers who reach the $250 ceiling are graduated to the Entrepreneur's Club level, and are provided technical assistance in creating jobs for others. The Village Net will most likely incorporate this model when our borrrowers achieve this level.
TVN is also exploring a savings and/or insurance component, so that borrowers begin preparing for continencies. This is a relatively new piece in microfinance, and many organizations are currently experimenting with options. While microloans have been utilized for some 30 years, the industry is constantly evolving. New services, new outcomes measurement, new business models are all in process, making this an exciting time to be involved in microfinance.