Bridge to Nepal Blog

Wednesday, September 16, 2009

Microloans

A microloan is a small amount of money, given to someone to start or expand their own business. This provides an opportunity for the poor to earn income for themselves and it brings support and joy into their families. Microloans work best when a group of people join in a covenant to jointly take responsibility for the loans.

Recipients of microloans meet together on a regular basis to repay their loans and receive instruction and guidance. They pay back their loans with a small amount of interest to help build up the loan fund, so more loans can be made to other families and the fund can be protected against any losses.

In Nepal, we are working to financially build up the ex-slave families by giving them opportunities to earn sustainable income for themselves. This will help with supporting several of the projects we are currently working on, like the schools, by making them self sufficient. Right now, many families can only afford to pay about $0.50 a month for school. By increasing their earnings through things like microloans, they will be able to pay more for school and help us to reach the goal of making projects like Grace School self sufficient within 10 years.
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In May 2009, a microloan of Rs. 17,000 (about $250) was given to Rajesh and his wife (left) for the purchase of a water buffalo. (see 12/11/08 post How a Water Buffalo Can Make a Difference). This was the first microloan we made for a water buffalo in Nepal. The buffalo recently had a calf and is now producing 4 liters of milk a day. Milk currently sells for about $0.30 a liter providing a survival level income the family. The calf will be given to another family in need. Rajesh is now the president of the Microloan committee. His group of 12 people meets once a month and collect 10 Rs.to build up the loan fund so others may be helped. Rajesh has agreed to pay back his loan in 2-3 years with affordable installments. As the capital is repaid, it will make money available to help other families. The group is getting ready to make their second microloan for the purchase of a water buffalo soon.
To read more about microloans and how they are helping people in other parts of the world like India, go to www.spantrust.org/sdmt.php.