Grameen America is changing lives, one microloan at a time

When David Gough needs inspiration, he thinks of people like Shanté, a custom jewelry entrepreneur in Newark, NJ; Alfa, which owns and operates a beauty and skincare salon in Miami; and Shirley, a gourmet popcorn owner in Fresno, California.

They are among tens of thousands of women across the United States who have made their entrepreneurial dreams come true with the help of Grameen America, a nonprofit provider of microloans, financial training and support to its member borrowers. .

“Our borrowers are resilient and have great business ideas; they just need a bit of capital to make them happen,” said Gough, executive vice president and chief financial officer of Grameen America. “It’s inspiring to see the impact a small loan can have on the lives of women and their families. »

A hand

Since its founding in 2008, Grameen America has lent more than $2.4 billion to more than 150,000 women, replicating a business model developed by Muhammad Yunus, a Bangladeshi economist and civil society leader who received the Nobel Prize for peace for founding the Grameen Bank and pioneering the concepts of microcredit and microfinance.

Grameen America focuses on women who live below the federal poverty line — a group with few options for accessing capital, opening bank accounts, or building credit scores. He stayed true to Yunus’ original methodology, which requires women to form a support group and undergo training to learn about loans, savings and credit building before receiving microcredit. Initial loans cannot exceed $2,000 and borrowers make weekly payments over a 6 month term.

Borrowers open free savings accounts with commercial banks and make weekly deposits under the program. Grameen also reports microloan repayments to Experian, helping entrepreneurs establish a credit score and build their financial identity.

But the secret sauce to Grameen’s program is the center’s weekly meeting, where about 35 entrepreneurs meet with a relationship manager. Appointments are mandatory and attendance is taken. Members must bring proof of repayment of this week’s installment and they participate in financial literacy training designed to help their businesses succeed and enable financial mobility out of poverty.

Weekly meetings create a peer-to-peer learning environment that promotes success. “Our members learn the discipline of borrowing money, they see everyone in a similar position, and they share what they do with the money,” says Gough. “You have this wonderful model of social capital that is developing. We would lose that if we just gave the money without any accountability or community.

Impact of scaling

Grameen America, led by former Avon CEO Andrea Jung, has ambitions to rapidly expand its reach in communities across the country. To do this, Gough says the nonprofit will need to operate as as self-sustaining a social enterprise as possible. “We have to deliver professionally to cover our costs,” he says. “If we are going to ask our members to pick themselves up by their boots, we should do the same as an institution. So we run it as a business to be reliable for our borrowers.

With 29 branches in 23 cities, Grameen aims in 2022 to add six new branches in underserved communities in Atlanta, GA, Phoenix, AZ, Riverside, CA, Philadelphia, PA, and a second location in Charlotte, NC, and Miami, FL. For each branch it opens, the organization tracks key performance indicators to ensure the branch can cover direct costs and achieve full sustainability within five to six years.

The organization reaches deeper into communities with initiatives such as the $100 million Lifting America: The Campaign for Her Future, as well as the Elevating Black Women Entrepreneurs initiative, which launched in May. 2022 and aims to reach $1.3 billion in loans. to more than 80,000 black women entrepreneurs by 2030.

Grameen is also leveraging technology to increase efficiency, including digitizing loan disbursements and repayments. During the pandemic, they have turned to using services like Zoom and WhatsApp. “We were concerned that members might embrace the technology, but to our delight they picked it up well…with a little help from their kids,” Gough said.

Perhaps the most ambitious, Gough says, is Grameen’s plan to grow its loan portfolio from $158 million now to $600 million in ten years. While some of the money may be raised through philanthropic donations and bank loans under the Community Reinvestment Act, Grameen is also reaching out to impact investors with debt investing targeting foundations, banks, high net worth individuals and deals through ImpactAssets.

But no matter how big Grameen is, the bulk goes to people like Sheila, who took out a Grameen loan to open a mobile shop on 125th Street in Harlem, next to the iconic Apollo Theater. “Our borrowers are some of the smartest people when it comes to generating income and going after it,” he says. “They just need access to affordable microcredit and a bit of support to help them achieve their goals.”

Interested in learning more about Grameen America’s impact investing opportunities? Contact [email protected]

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