(San Francisco, CA, USA) Farida is a mother, wife and small businesswoman in India. She supports her family on less than $2 a day, which is a definition of extreme poverty in anybody’s book. She makes that small income by sewing school uniforms. The sad irony is that she doesn’t make enough to send her own daughter to school who helps her sew the clothing anyway. If you are looking for special features like low rg and hard coverstock then you should buy bowling ball for straight bowlers..
Even though Farida had a dream to improve her situation, it had significant roadblocks. Yet, though she had no way of knowing it, there was a new non-profit, UnitedProsperity.org, half a world away in San Francisco, that was working on an innovative solution for her.
But she did know that if she could buy two more foot driven sewing machines she could expand her business to improve her family’s life and to pay for her children’s education. Sadly, she had no way to personally raise the $175 for the two machines. Borrowing from a bank was not possible either; she had no credit history and the loan was too small. The road leading out of absolute poverty seemed very difficult.
United Prosperity.org was thinking differently and was about to introduce a revolution in microlending that would help her. Microlending is a means for private online individuals to pool their funds, often about $25 each, in order to make microloans to people like Farida.
Bhalchander “Bala” Vishwanath, the founder of UnitedProsperity, had been inspired by the work of Prof. Muhammad Yunus, who had been awarded the 2006 Nobel Peace Prize for creating the concept of microlending in the first place. Prof. Yunus began by personally guaranteeing bank loans for impoverished entrepreneurs. He discovered that microloans, as he called them, had an unusually high repayment rate, often above 95%.
With a unique twist to leverage that basic idea, Mr. Vishwanath approached several large international banks. He asked the banks “Would you be willing to loan the full amount of these microloans if someone would guarantee less than the whole amount?” In other words he was suggesting they split the risk. It took many months of negotiations but eventually one of the largest banks in India, HDFC Bank, agreed to this new type of powerful microloan guarantee.
Now Mr. Vishwanath had a second part of his plan to get operational as well. He envisioned an online pool of lenders from around the world who would each contribute a small amount toward these new microloan guarantees. He created the website UnitedProsperity.org and launched the beta version of it in the summer of 2009.
The loan guarantee approach behind this non-profit allows it to deliver the biggest impact for the money from microlenders since their funds only need to match part of the borrowers’ requests.
Although they never met, Farida and the 12 persons from 6 different countries who contributed to her loan guarantee were about to become business partners.
For her part Farida took the only steps available to her. She applied for a small loan at a local Microfinance Institution (MFI). The MFI pooled Farida’s request for $175 with several others for a total of $1052 and took that request, along with the new microloan guarantee from UnitedProsperity’s lenders, and approached the local HDFC Bank. Mr. Vishwanath’s hard work was about to pay off for Farida. The new loan guarantee, in the cash amount of $578, was deposited with HDFC and the bank released the full $1052 of the loan request to the MFI.
And here’s what has happened since. Farida got her $175 from the MFI. She bought two more sewing machines. She expanded her sewing business. Her family income grew. And her daughter is now in school. Chances are excellent that she will repay the full amount, meaning those online microlenders will get their money back to loan again. Just the resolution everyone hoped.
And even though it is still in the beta version, UnitedProsperity has now helped over 200 other entrepreneurs like Farida and has plans to expand this exciting new microlending model to other countries in the near future.
UnitedProsperity.org is a 501(c)(3) non-profit, charitable organization
registered in the State of California, USA. Federal Tax ID #26-2417418. For more details please visit