Microloans Are Breaking the Cycle of Poverty

Imagine getting a loan to start up your own business for just $250. Then imagine paying back that loan and getting another to expand and “franchise” your business. That’s exactly what has been happening in some of the poorest regions of the globe.

In 2006 the Nobel Prize Committee awarded Muhammad Yunus the Peace Prize for his work in developing a microloan program for the rural poor of Bangladesh. As a small college experiment in 1976, Yunus went directly to the poorest people in his country and offered them low interest microloans to start their own businesses. These loans ranged from a few dollars to a thousand and were mostly award to women hoping to help lift their families out of poverty. These newly minted entrepreneurs flourished and paid back their loans in full. In turn, they provided much needed services for their community and began to improve the lives of everyone within their social circle. With the ability to pass these businesses down to their family, they are truly breaking the cycle of poverty.

Building upon the success of these “experimental loans” Yunus formed the Grameen Bank with a simple mission: the total eradication of poverty from the world. As he claims on his website “Grameen is a message of hope, a program for putting homelessness and destitution in a museum so that one day our children will visit it and ask how we could have allowed such a terrible thing to go on for so long.” Most of these small businesses are created around the skills of the owners. It could be baking bread, sewing gowns, carpentry or simple repair work. The microloans allow for the purchase of equipment and products that can be utilized in their services.

The recipients of the microloans are encouraged to follow 16 basic guidelines that advance the basic principals of the Grameen Bank which are “discipline, unity, courage and hard work.” The small businesses are encouraged to not only flourish and expand but to give back to their communities and help other start up businesses.

There is a noble “can do” spirit among these small business owners as they prove that if given the opportunity, anyone can excel by using their chosen trade skills. The Grameen Bank is now owned by 90% of the rural poor it serves. And they have recently opened their first American branch in New York City. These microcredit programs can have a ripple effect on communities both large and small.

One valuable lesson to take from all of this is to think about starting your own business and becoming your own boss. It begins with deciding what skills you have to offer and building upon that. Maybe it’s opening up an auto service in your garage or building gardening tables. Of course, in America there are many more regulation and tax hurdles to jump over before achieving success with a small business but that shouldn’t deter you from considering the possibilities.

— Meyer