|Señora Melendez has been selling tortillas for 25 years |
and now employs three people. She has her 4th microloan
from the microloan fund established by the Caring Fund and
administered by El Pueblo de Dios en Camino.
Through the Caring Fund, parishioners at St. Brendan the Navigator worked together with our brothers and sisters in El Salvador to design a microcredit lending program that fills an urgent need for poor families in San Ramon.
For many people in San Ramon, good-quality permanent jobs are hard to come by, and many find that they need to create their own source of income. Unfortunately, most poor people do not have access to credit from traditional financial institutions, and most don't even have bank accounts, let alone a credit card. Because they are poor and have no collateral, traditional banks generally see poor people as high-risk borrowers and won't lend to them. Some manage to get loans from unscrupulous loan sharks who charge as much as 50% interest daily, often forcing borrowers to pay their loan back by the end of the day. Before the Caring Fund established this microcredit fund, Señora Melendez (pictured above) used to pay $80 a month interest on a loan of $200.
As part of our 2011 Advent Sharing Project, we raised a total of $15,000. Of this, $5,000 funded the installation of water cisterns in Las Nubes, and $10,000 was the endowment of a microcredit fund. When the volunteers implementing the program in San Ramon had organized the administrative framework, we sent an initial $2,000 to finance the first few rounds of microloans, with the remaining $8,000 contingent upon successful implementation of the project, proper record keeping, and favorable results. As you can see from the table to the left, the results are OUTSTANDING.
In just 18 months, El Pueblo de Dios en Camino has taken $2,000 and turned it into 66 small loans totaling over $10,000. These loans have gone to 27 women and four men and generated more than $500 in interest. By carefully selecting the borrowers from within the community and providing them with business training and support, as well as training on human rights and character building, they have maintained a high level of integrity and effectiveness. In fact, only one of the first 66 loans is behind on payments, and the interest payments have added 25% to the fund’s endowment in 18 months. Microcredit programs are demonstrating what church teachings have been saying for centuries: All people are worthy. Not only are they worthy of trust, but worthy of investment. Traditional banks deem poor people high-risk borrowers because they lack capital and assets that can be used as collateral. Yet ironically, the San Ramon program lends to some of the poorest people in the hemisphere and is boasting better repayment and faster growth rates than many traditional banks.
Here is a brief list of some of the businesses the microcredit fund of El Pueblo de Dios en Camino has helped fund:
- Tortilla sales
- Printing services (A $150 loan can buy a printer and ink that allows someone to open a small scale printing service in a community where personal printers and computers are not common)
- Urban egg farm
- Sewing shop
- Fruit stand
- Clothes shop (Even just $100 is enough for someone to go and buy discounted clothing such as underwear at bulk rates, and bring it back to the community to sell.)
- Shoe making