Microfinance

The foundation of our Integral Development Model (IDM) is our Microfinance Services program, which consists of five components designed to sustainably improve the economic situations of impoverished families:

• Microfinance
• Group-lending
• Business Training
• Savings
• Insurance

Microfinance

The main ingredient is a small loan averaging $150 to $200 to start or expand the small business of a person living in poverty. This capital empowers the working poor with self-employment so they can invest in their business and use the profits to provide for the basic needs of their families.

Esperanza serves people who are not eligible for commercial loans or who are preyed upon by loan sharks who charge extreme interest rates. Esperanza charges a 2% interest on the loan balance, which is paid every two weeks over a six-month period. Being in charge of their own business and working to repay the loan by their own merit fosters dignity and self-worth.

Group-lending

Esperanza associates form solidarity groups of five entrepreneurs in a given community. Multiple groups in one community join to create what we call a Bank of Esperanza. Together, this group receives their micro loans, goes through business training, makes loan payments ans supports one another throughout the process.

If a member cannot pay in full or on time, the other group members are responsible for making the payment. This not only cultivates social bonds and trust, but also accountability as well as group solidarity.

Francesca proudly displays her business selling vegetables

Business training in Haiti

Business training

Our associates, close to 90% of whom are women, use their loans to invest in their businesses and use their profits to improve nutrition and living conditions and send their children to school. Once associates have been through the loan cycle and have successfully repaid their loan, they are eligible to borrow larger amounts to continue developing their business and enhancing their quality of life.

In order to maximize the effects of the micro loan, Esperanza offers its associates training in business planning, specific trade skills, marketing, budgeting, inventory management and accounting. Five business training sessions with an Esperanza loan advisor, in addition to training within the course of the loan cycle, are required for the program and prepare them for running their businesses and understanding how the loan repayment process works.

Required Savings

Esperanza requires each associate to put 5% of the balance on their loan into a formal savings account. Living in poverty can cause increased vulnerability to disease, exploitation, natural disasters and theft. Therefore, mandatory savings as well as voluntary savings can ensure that our associates will be better prepared for emergencies and have improved security of their capital for future investments such as tuition and home improvements.

Saving Circle Programs

With a successful pilot program in Miragoane, Haiti Esperanza is also initiating three other Savings and Credit Associations or Saving Circle Programs where groups of individuals between 10-20 people gather on a weekly basis to save money in a disciplined fashion and to also receive training and teaching with a Christian-based curriculum. Savings programs are designed differently depending on the community's needs.

Insurance

In the event that an associate becomes incapable of working and is unable to repay the loan, whether because of extreme illness, injury or death, then the family keeps the loan balance without having to make any more payments.