Microloans began as a simple idea to help the poor start small businesses and earn income in order to help them move from survival mode to actual life planning and preparation.
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| Business micro loans help many |
Even though the amounts loaned are typically small (hence the term micro loan), the benefits are considerable to Philippine people living in poverty. Borrowers of micro loans are required to repay the loans and also pay interest which is usually slightly higher than normal rates.
This occurs because the cost of servicing microloans is very high. However, as more microfinance organizations continue to engage the poor, competition is beginning to cause interest rates to lower.
Micro loans are indeed very micro. Many times a loan of $20 will allow an individual living in poverty to begin a business and improve his family’s situation. In fact, business micro loans have been shown to be one of the most effective means of fighting poverty around the world.
There are several very good charities which support micro loans, such as Micro Place and World Vision.
It is my understanding that a donation to World Vision will be used repeatedly and is a true charitable contribution, whereas Micro Place is more of an investment which returns a percentage to the contributor.
The difference between microloans and most charitable contributions is that they are in fact a “hand-up” and not a “hand-out”. Micro loans are meant to empower people to help themselves and are a simple and extremely effective tool for reducing Philippines poverty.I sincerely hope you will consider investing in business micro loans as part of your charitable contributions for alleviating poverty in the Philippines.
I agree with this philosophy. Micro-Finance will be a huge catalysts on alleviating poverty in both rural and urban sectors in the Philippines.
ReplyDeletebusiness in the philippines
Micro loan is an opportunity to the people living in poverty to improve their lives. I just hope that Micro Place and World Vision's effort will grow and won't be put to waste.
ReplyDeleteMicro finance used to have a different name...it was called the Mafia. Here in the Philippines, the average interest rate is 35 to 40 percent on a miniscule loan of Php5000.00. There is an additional deduction of Php700.00 taken from the principle and shouldered by the poor bloke that was easily fooled into taking the cash. Lack of education prevents these people from realizing or understanding what they are really doing to themselves-placing their families into even more debt and paying interest rates that are even higher than what the local gangsters are offering. They have guts to call it "help for the poor."
ReplyDeleteShame on you.
I want to thank you for posting this. After doing a little more research on this, I found that Kiva may charge as much as 35% interest on their short term loans, which is pretty high.
DeleteThis has got me thinking about a ministry/business possibility. Do you have any suggestions how we might make this happen so everyone can benefit?
Thanks again!