Those living in poverty are disproportionately female. According to the United Nations, women and girls account for 6 out of 10 of the world’s poorest and two-thirds of the world’s illiterate people. Most women around the world don’t have access to financial services. They can’t get a loan to start a business or open a savings account. The bottom line is that investing in women, as well as men, means more jobs, more kids in the classroom, and a healthier global economy.
Women typically spend about 90% of their income on their families—on nutritious food, for example, or tuition to keep their children in school, which can change the destiny of families for generations. By comparison, men only spend about 30% on their families. By reinvesting in their families, women create a domino effect of positive change.
Here’s the breakdown: Microfinance is the provision of financial services to the poor. Individuals are provided with loans to start or grow small businesses, allowing them to become economically self-sufficient, provide for their families long term, and replace their dependency on limited-donor funds a.k.a. charity.
Microfinance fosters self-reliance in impoverished people in a way that charity doesn’t. Studies have shown that microfinance borrowers break the cycle of poverty by being able to send their children to school.
The women who get these microloans normally use it to start a small farm, a vegetable stand, or a handicraft business. This loan, which can be as little as $200, gives them the opportunity to create a small business that supports their family and creates jobs.
The women are part of Trust Groups, a typical loan-client starting point. These groups are comprised of 10–30 members who pledge to guarantee each other’s loans, replacing the need for collateral. Basically, if even one woman doesn’t pay her loan, no one in the group gets their next loan. This system creates accountability, which results in extremely high loan repayment rates.
This process is not solely to provide loans, but also to provide the training and tools needed to break out and stay out of poverty. It moves people from a cycle of poverty into a sustainable cycle of success.
This cycle starts with providing access to a loan to build a business. The client then receives vital business and leadership training. She is supported and empowered by a Trust Group, a typical loan-client starting point, comprised of 10–30 members who pledge to guarantee each other’s loans, replacing the need for collateral.
Although the women we empower are living in poverty, we treat them like the businesswomen they have the potential to become. These women do not want charity. They want to be treated the way everyone else is treated in the business world. The result of this process is business growth and success. The loan is then repaid and reinvested, allowing more women to receive loans.
After the 2005 tsunami in India, she volunteered cleaning villages. A woman approached her with a request that shifted the trajectory of her life forever: “ I don’t want your money, but can you teach me how to make it?” Renata then studied under Nobel Peace Prize–winner and microfinance pioneer Muhammad Yunus for three months before creating a microfinance program in India.
No, EBY gives funds to the Seven Bar Foundation (SBF). SBF is a 501(c)(3) that finds and vets the top microfinance institutions (MFIs) in the world. Each MFI must pass this vetting process in order to qualify as a Seven Bar Foundation on-the-ground microfinance partner. The MFIs work locally with disadvantaged women to provide them with small loans to start their own businesses as an exit out of poverty.
Microfinance institutions (MFIs) are organizations that provide financial services to the poor. Many of these MFIs offer services other than just loans, like business training, and even teaches them how to successfully save money in some instances.
EBY allocates 10% of net sales to the SBF’s selected microfinance institutions to empower women out of poverty and into business through microfinance.
We define net sales as gross sales generated adjusted for returns, damages, and/or discounts given at the time of sale.
After EBY provides 10% of its net sales to Seven Bar Foundation, these proceeds are then disbursed to carefully vetted microfinance institutions who loan them to underprivileged women. These fearless women then utilize the loan and other services provided by the MFI to build sustainable businesses. As a result, they become self-sufficient and break the cycle of poverty for themselves, their children, and the community. Win/Win.
SBF has given $352,000, which has impacted 2,486 women, but that number is going up, up up!
Since its inception, SBF has disbursed microfinance loans across the U.S.A., Indonesia, Colombia, Rwanda, India, Sri Lanka, Haiti, Mexico, and Ghana. SBF has an alliance with a credible MFI in every country where the loans are disbursed. SBF aims to expand their portfolio of countries in the near future and impact more determined women.
Absolutely! Currently there are 18 million women in the U.S. living in poverty with an average income of $24,000 and three kids. Many of them are single mothers. The average loan size in the U.S. can range from $1,600, which gets her the materials to start her own Etsy business, up to about $7,000.
If you are an individual seeking a microloan, we suggest that you apply through one of Seven Bar Foundation’s accredited MFI partners: ACCION USA, Kiva, Fundacion En Via, or Opportunity International. If you would like to volunteer your time or make a monetary contribution, please click here. [link through]
The screening of applicants is generally done by the organization’s loan officers, who build strong relationships with clients and serve as much more than just a financial advisor to them. Loan officers are oftentimes from and live in the communities in which they serve. The organization also screens applicants through Trust Groups, in which members of each group are voted in by other members. All applicants must participate in mandatory training before loans and other financial services are provided to them. These elements ensure that their repayment rates stay high and that the authenticity of relationships is maintained.
Trust Group members elect their own leadership and follow a curriculum that ensures each client has the tools, knowledge, and resources to maximize their loan.
In addition to pre-loan business training, Trust Groups meet weekly to repay their loans, offer support, and receive loan officer–led transformational training in diverse topics, including financial literacy, business, interpersonal relationships, and health.
Yes, borrowers pay interest on loans because there are many expenses associated with providing small loans, especially in rural areas. Interest rates vary by country depending on the local economy. The interest covers the cost of delivering the loan and related products and services, including savings accounts, insurance, support, and training.
Part of Seven Bar Foundation’s vetting process is to ensure that selected microfinance institutions charge the lowest possible interest rate—to the degree that most microfinance institutions struggle to be self-sustaining and have to take donor funding in order to survive.