Today I’m going to ask you to use your imagination and dream a little.
Imagine that you have the opportunity to borrow a small amount of money. Then think about how you could use this money to improve your business.
If you are a farmer you might want to consider planting a new crop. For example, if you grow potatoes, you could buy and plant seeds of another crop which can be harvested earlier or later than the potatoes. This is a way to earn more money and earn it at a different time of the year.
Or you could use the loan to buy a cow or another kind of livestock. If you buy a cow you can use some of the milk to add nutrients to your family’s diet. And you can sell the rest of the milk to make some money.
Maybe your business is selling fruits and vegetables at the market or by the roadside. One way to improve business would be to build a stall or a small shed to shelter your produce from the rain and the sun.
If you are a dressmaker some borrowed money could buy you some beautiful new materials. If you are a carpenter you could buy some new tools. A new tool could help you work faster and produce more goods to sell in a shorter time. Whatever your business may be, having some extra money can be helpful because it gives you more bargaining power. If you are paying with cash you can choose to buy the products you need from the person who is asking the lowest price. Also, you can buy a lot of goods at one time which reduces the price per item.
If you don’t have a business or a steady income, a loan could help you start a business for the first time. You could keep some small livestock or do beekeeping. You could start a small soap-making business. You could become a shoemaker. The possibilities are endless.
But now, think of your own situation. Does it seem unrealistic to think of borrowing money? Unless you already have some money saved, getting a loan is usually difficult, if not impossible. Most banks won’t lend you money unless you already have some money, land, livestock or something else of value that you agree to give them if you can’t pay back the loan.
But this is not true of all banks. In some places there are banks that will lend you money even if you have nothing. That’s right. These banks don’t require that you have some land or livestock or an expensive house before you can borrow money. In fact, sometimes, the poorer you are, the more willing they are to lend you money. These banks know how important your business is, even if it is a very small business. And they know that you can be trusted to pay back the loan.
Banks that lend money to poor people work in different ways and have different names. Some are called credit unions. Some are operated by non-profit organizations, others by large banks. They lend a small amount of money to each person or group of people. They do not operate like the big commercial banks that work only for large profits.
These banks make small loans because they know that small businesses are a very important part of the economy. They want to support you and their job is to help you develop your business.
There are a number of ways that these banks operate. Some of them lend money to individual people. Some of them lend money to groups of people. In this case, if you want to borrow money you must first find three or four friends or neighbours. Then you can borrow as a group. Each member of the group receives part of the loan and each person can use the money they get for their own business. But if one member cannot make a payment, the other people in the group have to get together and make the payment. The group then works out among themselves how to get the money back from the member who has not paid.
Some of these banks offer much more than just a loan. They also provide training and business advice to the borrowers. So they help you to make decisions about spending the money in the best way possible.
Here’s an example of a woman from South Africa who put her loan from one of these banks to good use.
Her name was Faith Moshiamonyane. Faith didn’t have much money. She lived in a two-room shack. She supported her family by selling arrangements of plastic flowers. But her dream was always to use real flowers. When she heard about a local lending program she joined immediately.
At first she borrowed 140 dollars. With this loan she went after her dream. She bought a large supply of real flowers and used them to make many beautiful flower arrangements. Faith made a good profit from selling these flowers. With the money she earned she was able to move into a large store on a busy road. It took her twelve months to pay off her loan.
When she repaid the loan she applied for and received a second, bigger loan of 200 dollars. With this loan she bought business cards advertising her flower arrangements for weddings and funerals. With all the new customers who contacted her because of the business cards she sold more and more flowers and earned more money.
Faith was very proud that she had managed to improve her business and earn enough money to pay her daughter’s tuition at nursing school.
This is just one woman’s story. Millions of other small business people have made their dreams come true with small loans. What is your dream?
More livestock to provide meat and manure? New farming equipment? Don’t allow a lack of money to keep you from pursuing your business goals.
Now you know about loans for small businesses. The next step is to find out how you can join a small loans program and get the credit you deserve.
This script was written by Jennifer Pittet, Managing Editor, Farm Radio Network, Toronto, Canada. It was reviewed by Barbara Calvin, Director, International Operations, Calmeadow.
An introduction to microcredit and microfinance, Barbara Calvin, 1996. Calmeadow, Toronto, Canada.
Resources for Further Information
The following is a list of institutions providing financial services to small-scale enterprises
The list is condensed from the publication Sustainable Banking with the Poor, 1996, published by The World Bank, ASTHR/AGRPW, 1818 H Street, N.W. Washington, D.C. 20433, U.S.A.
Botswana BOSCCA (Botswana Savings and Credit Association)
Botswana Botswana Cooperative Bank
Cameroon Opportunities Industrialization Centers International
Egypt Egyptian Small Enterprise Development
Ethiopia Gemini Trust
Ghana African Development Foundation
Ghana CUA (Ghana Cooperative Credit Union Association)
Ghana 31st December Women’s Movement
Ghana Women’s Revolving Loan Fund (Ghana)
Kenya CARE (WED)
Kenya Kenya Rural Enterprise Program
Kenya Women’s Finance Trust (WWB)
Lesotho Village Workshop and Revolving Fund Project
Liberia LCUNA (Liberia Credit Union National Association)
Malawi WWBMA (Women’s World Banking Malawi)
Malawi SEDOM (Small Enterprises Development Organisation of Malawi
Nigeria DEC (Development Exchange Centre)
Nigeria Waste to Wealth
Nigeria FADU (Farmers’ Development Union)
Rwanda DUTERIEMBERE (WWB)
Sierra Leone Yoni Rural Bank
South Africa Get Ahead Foundation
South Africa Women’s Development Banking
Sudan Savings and Social Development Bank
Swaziland ISWFT (Inbita Swaziland Women’s Finance Trust)
Tanzania Tree Crops Project (Cooperative and Rural Development Bank)
Tanzania Tanzania Housing Bank
Tanzania Mennonite Econonic Development Association
The Gambia AFET (Association of Farmers, Educators and Traders)
The Gambia GRUDA (Gambia Rural Development Agency)
Uganda FORUD (Foundation for Rural Development)
Uganda Rural Farmers Scheme ? Uganda Comm. Bank
Zambia WFTZ (Women’s Finance Trust of Zambia, Limited)
Zimbabwe Collective Self?Finance Scheme
Zimbabwe Social Development Fund: Social Dimensions Fund
Zimbabwe Zimbabwe Women’s Finance Trust, Limited
Bangladesh Bangladesh Rural Advancement Committee
Bangladesh Proshika Manabik Unnayan Kendra
Cambodia Association of Cambodian Local Economic Development Agencies
India AWAKE (Association of Women Entrepreneurs in Karnataka)
India Bridge Foundation
India Working Women’s Forum
India AKRSP (Aga Kahn Rural Support Programme)
India SEWA (Self Employed Women’s Association Cooperative Bank)
Indonesia Bank Bukopin, Cooperative Rural Finance Program
Indonesia BRI Unit Desa (Bank Rakyat Indonesia)
Indonesia Yayasan Indonesia Sejahtara
Malaysia CUPC (Credit Union Promotion Club)
Malaysia Bank Negara
Nepal Grameen Bank, Nepal
Nepal SFDP (Small Farmers Development Program) ? Dhading
Nepal PCRW (Production Credit for Rural Women)
Pakistan ADBP (Agricultural Development Bank of Pakistan)
Papua New Guinea FESALOS (Federation of Savings and Loan Societies)
Philippines Alalay Sa Kaunlaran sa Gitnang Luzon, Inc. (ASKI)
Philippines Ayala Foundation
Philippines CARD (Center for Agriculture and Rural Development)
Philippines Microfinance Standards Coalition Secretariat
Philippines IIRR (International Institute for Rural Reconstruction)
Sri Lanka Sarvodaya
Sri Lanka People’s Rural Development Association
Sri Lanka The Women’s Bank in Sri Lanka
Thailand BAAC (Bank for Agriculture and Agricultural Cooperatives)
Thailand Foundation for Integrated Agricultural Management
CARIBBEAN AND SOUTH AMERICA
Barbados Barbados Co?op Credit Union League
Belize Belize Credit Union League
Jamaica Self Start Fund
Jamaica Jamaica Co?op Credit Union League
Jamaica Friends of Women’s World Banking
Trinidad and Tobago Co-operative Credit Union League of Trinidad & Tobago