Microloans and community investing have been in the news the past year, in large part due to the Nobel prize awarded to Muhammad Yunus, one of the champions of the practice. Essentially, microloans are small loans (on the order of several hundred to several thousand dollars) given to people who would never qualify for a standard loan, i.e. those who are very poor. The process seems to work remarkably well with very low default rates. And once a loan is repaid the money can be reloaned to the next borrower, providing a much larger impact than a simple donation.
Over the past several months we’ve been researching several groups that funnel money to these community banks. About a month ago we decided to make a small initial investment in Oikocredit World Partnership through the Calvert Foundation.
Best case scenario – our small loan helps several people build their business, which in turn helps their neighbors.