What is Microfinance?
Microfinance emerged in the 1970s led by Muhammad Yunus (winner of Nobel Peace Prize in 2006) in Bangladesh as a means of offering financial services to the working poor — those who were previously considered “un-bankable” because of their lack of collateral. Once given the opportunity, not only did clients of MFIs expand their businesses and increase their incomes, but their high repayment rates demonstrated that the poor are capable of transforming their own lives given the chance. This model of lending disproved all conventional thinking. Microfinance was born. Since then, microfinance has become one of the most sustainable and effective tools in the fight against global poverty.
How Microfinance Works
The most common microfinance product is a microcredit loan — usually less than $100. These tiny loans are enough for hardworking micro-entrepreneurs to start or expand small businesses such as weaving baskets, raising chickens, or buying wholesale products to sell in a market. Income from these businesses provides better food, housing, health care and education for entire families, and most important, additional income provides hope for a better future.
"Poverty is unnecessary."
- Muhammad Yunus
What is Kiva?
Kiva.org is the method TEEXAS utilizes for lending to entrepreneurs in third world countries.
From the Kiva website:
Kiva lets you connect with and loan money to unique small businesses in the developing world. By choosing a business on Kiva.org, you can "sponsor a business" and help the world's working poor make great strides towards economic independence. Throughout the course of the loan (usually 6-12 months), you can receive email journal updates from the business you've sponsored. As loans are repaid, you get your loan money back.