Women in Nicaragua cannot access traditional loans without presenting significant assets for collateral and, traditionally, Nicaraguan women do not own such assets. Therefore, it is extremely difficult for them to get seed capital to start their own businesses and supplemental capital to continue to grow them. JustHope partners with the Directors of a local Nicaraguan Microcredit organizations to fund small banks that will help change that. “What we want,” the Director of one of our partner organizations says, “is for women to have the resources to live their lives without depending on other people.”
Since 2009, JustHope’s microcredit program has provided over $50,000 in capital for local women’s organizations to start small banks. And these organizations have then provided microcredit loans to over 300 women. What began with 10 women in the community of Chacraseca has expanded to more than 15 banks in four communities! After 15 years, the repayment rates of those locally owned and managed microbanks continues to be over 98%!
Here’s how it works
JustHope connects with local community leaders who gather a group of women in a local community and talk with them about how access to small loans might help them start small businesses to support their households. If the women decide they would like to move forward with creating their own community microbank, JustHope finds partners in the US to fund their dream. A new bank that will serve 10 women can be birthed with just $5000!
While JustHope is raising the start-up funds, the women continue to organize themselves. With JustHope’s help to identify locally available advisors, the women get training to analyze their communities and make decisions about: what kinds of businesses will be funded; what the loan amounts, interest rates, and repayment schedules will be; how the women will support one another toward success; and what, if any, collateral will be required. They learn how to choose projects that are likely to succeed, how to make a budget, how to market their businesses and how to manage their income and expenses.
Loan amounts in most of the banks range from $100-$500 and have different repayment terms since the types of businesses – and, therefore, the regularity of income – varies. Most banking groups choose “social capital” as the guarantee rather than physical collateral. Social capital means the group agrees that if one woman fails to repay her loan, the other women in that banking group will share the burden of repaying it. This insures that the bank stays solvent and available for new loans year after year!
“If you or a group you are part of are interested in helping a small group of women become more independent, please contact us about sponsoring a new bank for just $5000.”