moved to Dallas 12 years ago with a dream of owning a sewing
shop, just like the one she left behind in Honduras. But
getting a bank loan with no U.S. credit history and no collateral
was an impossible task. Now, she is on her third loan for
a sewing and clothing business through a spinoff of Grameen
Bank, that has kicked off a global poverty-fighting movement.
credo of economist Muhammad Yunus, is simple: Poor people
are bankable. And women, in particular, make fine credit
risks, and lending groups of peers can substitute for credit
officers and collateral.
by Plan Fund loans, Olga Areniboz rents two
apartments where she lives and operates her tailoring business.
have good credit ... and I have never been behind in my payments,"
says Ms. Areniboz, an energetic woman.
Dallas, of course, is worlds away from Bangladesh, a country
where per capita income is a mere $400 annually. But like
Grameen Bank, the Dallas program is aimed at the poorest of
as the PLAN Fund, the program has operated
for about five years here. It's one of two such programs incubated
in the United States by Grameen Foundation, USA based in Washington.
And it's given out about $500,000 in loans to entrepreneurs
whom traditional banks probably would have considered far
too risky. Since 1996, the number of micro-enterprise
programs giving loans from $500 to $25,000 has doubled to
650 in the United States, according to Aspen Institute, a
Washington based think tank. In countries such as Mexico,
the programs are experiencing an even larger growth spurt.
In the Dallas program, loans are also aimed at the very poor,
but start at $500 and can go as high as $12,000. The "plan"
in PLAN Fund stands for the Peer Lending Action Network. Though
it is less common in U.S. micro-enterprise programs, PLAN
Fund uses peer groups to ensure that loans are repaid and
also to share business tips. The PLAN Fund runs about a dozen
lending centers in the Dallas area, working with the networks
of established organizations ranging from the Greater Dallas
Hispanic Chamber of Commerce, to North Dallas Shared Ministries.
Areniboz's group meets twice a month at the Hispanic chamber.
It christened itself Las Aquilas de 2003 or the Eagles of
2003, to reflect its optimism. "I said we are going to
fly very high, and no one is going to pull us down",
Ms. Areniboz says. To get her first loan, Ms. Areniboz attended
ten hours of classes, including tutoring on the basics of
a business plan and book keeping. With her first loan, Ms.
Areniboz bought two sewing machines that stand near a window
in an aging apartment complex, where she rents two units.
One is used for her business, and the other is used, well,
for her business, and for her bedroom and kitchen. Her third
loan with the PLAN Fund is for $2,500. In
addition to frilly pink dresses for little girls and bedspreads
in primary colors, Ms. Areniboz sells sodas, telephone cards
and dried flower arrangements. She now makes enough money
to contribute to a savings account and to send back money
to Honduras to her children. Ms. Areniboz even employs an
And unlike many of the programs in the developing world, most
U.S. micro-finance programs aren't self-sufficient. The PLAN
Fund is one of them, and that is why there is currently
a fund-raising drive to cover a $231,000 deficit in the operating
budget. The great bulk of that isn't the result of loan write-offs,
but simply payroll expenses. Some think these factors are
partly the reasons why U.S. micro-finance programs haven't
taken off with greater force.
one could make money in the U.S. [in micro-finance], mainstream
banks would be doing it in a heartbeat," says Dr. Caroline
Glackin, the director of the Entrepreneur Center at Delaware
State University. Micro-finance programs can't charge interest
rates that would recoup the operational deficits of the programs
because of U.S. usury laws. Typically in Latin America
and Asia, the interest rates can range from 20 percent to
80 percent. The PLAN Fund's interest rate is 12 percent annually,
for example. That is higher than a commercial loan, which
would require collateral and typically come in at 8 percent
to 10 percent annual interest. But it is also much lower than
so-called payday loans, where annualized interest rates can
soar past 200 percent.
Dallas' PLAN Fund must raise funds to cover
its operating budget for about 450 borrowers in 2004. Next
year, it will need about $230,000.
Agather, chairwoman and chief executive of JPMorgan Chase
Bank in the Dallas region, is leading a committee aimed at
reducing part of that deficit.
sees that this whole effort makes perfect sense," says
Trish Houck, a Dallas businesswoman who has donated money
to the PLAN Fund. "And it doesn't matter
where you come from, whether Mexico or El Salvador, or whether
you have credit history."
Source: Dallas Morning News
October 21, 2003