Our latest package of loans assists five small businesses in Guatemala. First, Angel, an aspiring farmer focusing on coffee and avocado production, will use his $750 loan for crops and fertilizer. Second, members of the San Antonia Weaving Cooperative will use their $1,050 loan to create new textile patterns to stimulate sales. The funds will pay artists for their unique designs. Third, the Nahuala Cooperative is a small weaving cooperative that is experiencing high demand from wholesalers. A $625 loan will enable the group to market new designs.
Fourth, and finally, is a two-stage loan. SGDF has loaned $673 to Giovanni Caseres, an auto mechanic with many years of experience, for the purchase of an engine hoist. This equipment will enable him to offer full engine rebuilds as compared to only top engine rebuilds that he was able to offer prior to this loan. This loan is unique in that, when repaid by Giovanni after only three months, the funds will be loaned to immediately to pottery artist Elvira. She will use funds for two purposes: mentoring in business financial management and to purchase materials for unique collectible items related to coffee such as coasters.
These loans demonstrate SGDF’S careful and respectful approach to micro-lending. Working with As Green as it Gets (AGAIG), our field partner in Guatemala, we enable small entrepreneurs to help themselves. Loans are made to meet needs identified by the entrepreneurs themselves, and our terms are tailored to meet the specific needs of the borrower. For example, repayment terms for these five loans range from three months to five years according to the needs of the borrower and type of business involved. For example, the loan to Giovanni Caseres, the auto mechanic who is using is loan to purchase equipment, is for only three months. In contrast, Angel needs three to five years for newly planted coffee plants to yield a marketable crop, and it takes that long or longer for avocado seedlings to mature and produce fruit.
Beyond meeting the specific needs of borrowers, our loans are always interest-free. Moreover, upon repayment, funds are loaned to another aspiring entrepreneur to establish or expand his or her business. When each of these loans totaling $3,370 is repaid, we will lend the funds to another small business person in memory of Mitchell J. Taylor, providing a lasting memory of his contributions through SGDF. With a repayment rate of over 99.9% since SGDF made its first group of loans on July 4, 2009, we know that our programs are sustainable for the long run.
Copyright ©2018 by Paulette L. Stenzel, Professor of International Business Law, Michigan State University, and advisor to Spartan Global Development Fund.
*This blog post is also available on the Spartan Global Development website. Please visit www.spartanglobalfund.org to learn more about the passion, hard work, and accomplishments of our MSU students and young alumni who work tirelessly and with great passion to help small entrepreneurs gain access to capital through microloans.