Microcredit is the lending of small amounts of money to self-employed people who usually live in conditions of poverty. Friendship Bridge believes that for best results in eliminating poverty, microcredit must be combined with education and other social services. We call this our Microcredit Plus program, and our Client Continuum reflects our theory of change, which we view through the metaphor of a tree. The roots represent the various products and services, or inputs, we provide to our clients, which build a foundation for their path to empowerment. The leaves of the tree represent the outcomes clients experience as they grow over time – from Dreamer to Entrepreneur and to Leader.
Friendship Bridge’s average loan size is $318 over nine months with a 3% monthly interest rate, and our clients maintain a 98.6% loan repayment rate. To borrow through Friendship Bridge’s Microcredit Plus program, women must first form groups of 7-25 members called Trust Banks. Each Trust Bank co-guarantees individual member’s loans and participates in the Non-Formal Education sessions that are part of every monthly loan repayment meeting.
Trust Banks are an integral part of the Microcredit Plus program. They create an empowering environment through the women’s support and encouragement of each other. We have found the Trust Bank environment provides our clients with social capital in addition to the financial capital they receive through loans.
Each Trust Bank elects an executive committee that includes a president, vice president, treasurer, and secretary. This elected group is responsible for the management and leadership of the group. They problem-solve when there are attendance or repayment issues with individual members, they work with the Facilitator (loan officer) to conduct effective meetings, and they handle banking (making deposits into and withdrawals out of their account) on behalf of the group.
During monthly Trust Bank meetings, Facilitators conduct Non-Formal Education lessons that focus on topics like business skills, women’s rights, health, and family. With the knowledge gained in these trainings, Friendship Bridge clients grow personally and professionally. They learn how to expand businesses such as weaving, embroidery, raising livestock or poultry, basket making, roadside vending, or farming. Profits from the women’s businesses help smooth household incomes, and one of the first things women do with increased income is invest in better nutrition and shelter for their families.
Friendship Bridge provides Microcredit Plus as a hand up to thousands of women in Guatemala. The additional household income gives our clients a greater ability to weather unexpected life problems (illness or natural disaster), decreases malnutrition and spousal abuse, improves access to education for the family, and improves hygiene and healthcare.