Providing More than Just Loans
By Lorena Gil, KF12, Fondo Esperanza – Chile
I have a love / hate relationship with credit and I doubt I am the only one. More than anything it’s what credit enables us to do that appeals to us as borrowers. It can be as simple as giving us the opportunity to purchase Christmas gifts for loved ones or as big as college loans or even a house. If those of us in developed countries cannot function without credit imagine those in impoverished communities.
Microfinance fills this gap by providing credit to the poor. However, obtaining credit comes with significant responsibility. How do the borrowers plan to repay the loan? How do they make sure they use the credit to help their family or business? It is the financial and entrepreneurial training that accompanies many microfinance products that has appealed to me as it empowers individuals to not only deal with their current financial constraints, but to view their loan as an investment.
Since its inception Fondo Esperanza has provided financial education to its borrowers and in 2008 it implemented a complete entrepreneurial training curriculum. It is a long-term educational effort, involving a duration of 3 years and comprised of 18 educational modules. Fondo Esperanza considers the Entrepreneurial School to be an essential pillar of support and management to empower the small business of individuals with limited resources. The plan encompasses four areas: personal, family, business and group/local development. All four areas are considered integral because Fondo Esperanza views its members as “integral entrepreneurs” whose abilities should be encouraged in business and in other areas that allow them to achieve permanent long-long term growth.
The training is delivered by a loan officer during the communal bank’s weekly or bi-weekly meetings. I attended many of these meetings and enjoyed each group’s different dynamics. But I also noticed the difficulties encountered when borrowers do not attend the weekly meeting. Not because the topics covered are not appealing to the borrowers–it was mostly family illness or financial constraints that at times made it impossible to get away for a few hours to attend these meetings. Many borrowers find the meetings refreshing as it provides an opportunity to get away and share their experiences with other entrepreneurs.
Fondo Esperanza (FE) is currently the largest Chilean microfinance organization and is proudly Kiva’s first microfinance partner in Chile! To view & read the bios of all the loans Fondo Esperanza has uploaded to Kiva to date, click here!