Our most recent Village Bank in Guatemala helped fund microloans for 15 women in two Village Banks – Artesanas San Pablo and Panajachelense located in Solola, Guatemala. With an average age of 31-1/2, the women who received Alliance Foundation funded microloans are using the funds (average of $250 each) to expand their businesses, which range from selling jewelry to…
Alliance Foundation Supports the Village Bank Program
Microfinance is the practice of extending small, uncollateralized loans and other support to low-income people, primarily women, to help them start to expand a business. This program targets the most vulnerable among the female population – women in poverty who live on less than $2 per day. Collateral is difficult to obtain for a population largely denied property rights. Therefore, most of these women have found traditional lending sources to be unavailable. In place of collateral, microfinance organizations use a “peer lending” model, providing loans to small groups of women who are jointly liable for these loans. This means that until each member of the group has repaid her loan, no other member of the group can get another loan. Such micro-entrepreneurs repay their loans with interest, further leveraging the investment increasing loan pools.
Historically, women have used these tiny business loans to lift their families out of poverty in less than three years. The families experience lower fertility and infant mortality rates, improved health and nutrition, higher immunization, fewer incidents of domestic violence, enhanced self-esteem, and greater involvement in community affairs.