Exactly what is microfinance?
It has been described as village banking, loans for the poor, and even barefoot banking, but microfinance always includes the provision of small loans for those who live in poverty with the intent of starting or expanding their own businesses.
The most powerful dynamic is the fact that after the initial money utilized to make a loan is repaid, that money is then re-loaned time and time again, multiplying the impact as much as 100-fold! Now you understand why it is said that donations given to microfinance outreaches are truly gifts that keep on giving.
“The poor stay poor not because they are lazy, but because they have no access to capital.”
Milton Friedman, 1976 Nobel Prize
Microfinance initiatives around the world have proven there are millions of impoverished people who, given the opportunity, are capable of working their way out of poverty with the help of a small business loan. This has worked across the globe but is particularly relevant in sub-Sahara Africa, where poverty is among the highest worldwide levels but the cost to lift a life out of poverty is remarkably low. The tremendous success story of how microfinance has transformed Bangladesh, at one time one of the poorest countries in the world, has served to underscore the fact that it is possible to invest monetary giving in ways that will have a profound and lasting impact on the poor.
Microfinance embraces an empowerment mentality, as opposed to the “old school” mentality of perpetual donor-funded programs which create dependency among the poor rather than empower them for long-term change and success. Our methodology must embrace a total commitment to the empowerment of the poor, and likewise a commitment to never again engage in misguided activities that create a welfare mentality in the minds of the people we are trying to help, enslaving them to handouts.
“We have a mandate to help transform the poor with a ‘hand-up’, not a ‘hand-out’.”
Bill Epperhart Co-Founder of Tricord Microfinance
To eradicate global poverty will require the concerted efforts of governments, aid agencies, NGOs, and business-based initiatives like microfinance. Some of these entities work on a “macro”-level, launching huge projects that deal with infrastructure and national programs. Microfinance, however, operates at the “micro” or grassroots level to effect change within families and communities. It works hand-in-hand with the poor, daring them to dream and providing them with loans and the basic business skills needed to start up or expand their own businesses. We believe every human being, including those who for generations have been trapped in poverty, have gifts and creative ability given by God; with our encouragement, they are better equipped to tap into their potential.
Economic development through microfinance can take place in every town and village in Africa. Literally millions of lives worldwide have been impacted through microfinance services, with hundreds of millions more waiting for their chance. Our vision in Tricord Microfinance is to help as many as possible get that chance as we strive to alleviate poverty and bring spiritual transformation to our generation.
“A proven but simple strategy gives the economically inactive the opportunity to have a sustainable life style and realize their dreams.
David Briggs Co-Founder of Tricord Global
Tricord Global, Inc. is a Christian based company that provides loans, safe savings, business training and consulting, and life skill training for the poor and disadvantaged in developing countries.
When a person applies to be a candidate for a microfinance loan for their small business endeavor, he or she must go through a qualifying process. A loan application is first completed and then the applicant must state in general terms the type of business he or she wishes to start.
At that point, applicants are brought into a group of other potential clients. There, they are guided through a vetting process where each business idea is formalized and logistics are ascertained: can the loan be repaid based on the business model and subsequently, can the business provide a sustainable livelihood? It is at that point the co-op is formed and funded, loans are approved, and the accepted clients receive their money.
Finally, the client is equipped to start his or her business. During the life of the loan (6-12 months,) clients attend biweekly co-op meetings. In these meetings, payments are made, business training and consultation are conducted, and co-op members build a community together; the exposure to this life-skill training ultimately affects far more than business. It gives solidarity to the teachings of Christ and lays a foundation on which Redemption may be found.