What does microcredit mean
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Generally speaking, microfinance is the lending of small amounts of credit to self-employed people who live in very poor conditions. Friendship Bridge believes that for best results in eliminating poverty, microcredit must be combined with education, we call this Microcredit Plus .
Friendship Bridge’s average loan size is $350 over nine months with a 2.6% monthly flat interest rate, and our clients maintain a 98% loan repayment rate. Nonformal education lessons are provided to clients each month during their loan cycle. With these tools, Friendship Bridge clients expand small businesses such as weaving, embroidery, raising livestock or poultry, basket making, roadside vending, or growing fruits and vegetables for sale at the local markets. As clients remain with Friendship Bridge over time, many of them start additional businesses. Profits from the women’s businesses help smooth household incomes, as well as increase self-esteem. As loans are repaid, they are re-loaned.
To borrow through Friendship Bridge’s Microcredit Plus program, women must first form groups of 7-25 members called Trust Banks. Each Trust Bank co-guarantees individual member’s loans and participates in the non-formal education
sessions that are part of every monthly loan repayment meeting.
A Facilitator leading a monthly Trust Bank meeting
Trust Banks are an integral part of the Microcredit Plus program. They create an empowering environment, not only through participatory non-formal education sessions facilitated by our loan officers, but, more importantly, through the women’s support and encouragement of each other.
Each Trust Bank elects an executive committee that includes a president, vice president, treasurer, secretary, and sometimes an at-large member. Elections are held at the beginning of each loan cycle. This elected group is responsible for the management and leadership of the group. They problem-solve when there are attendance or repayment issues with individual members, they work with the facilitator (loan officer) to conduct effective meetings, and they handle banking (making deposits into and withdrawals out of their account) on behalf of the group.
Friendship Bridge provides Microcredit Plus as a hand up to thousands of women in Guatemala. The additional household income gives our clients a greater ability to weather unexpected life problems (illness or natural disaster), decreases malnutrition and spousal abuse, while improving access to education for the family, as well as improving hygiene and healthcare.Source: www.friendshipbridge.org
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