Microcredit is supposed to describe loans offered with no collateral to support income-generating businesses aimed at lifting the poor out of poverty. Yet today there are many organizations that call themselves “microcredit” programs that offer loans to people who are not poor, that require collateral, and that are used primarily for consumption rather than income generation. There are even “microcredit” programs that are generating enormous profits for investors by charging interest rates as high as 100 percent or even higher!
Under the circumstances, we really don’t know what we are talking about when we talk about microcredit. I think it is time we classify microcredit programs according to clear, consistent categories. - Muhammad Yunus in Creating a World Without Poverty
Last month Muhammad Yunus spoke at George Washington University. He talked about creating social businesses and microcredit. His speech was well timed - It just so happens I'm currently a graduate student at GW and am working with a small team to build a Microfinance Resource System for lenders.
With over 3,000 microcredit organizations, investors face a bewildering variety of options. A lender may want to focus his efforts on a specific country, concentrate on female borrowers, or loan to only the most destitute. He may want his contribution to be tax-deductible or may require his capital be repaid over time with interest while avoiding usurious organizations who exploit borrowers under a ruse of generosity. We hope to solve these problems and the challenges raised by Dr. Yunus in his book.
We recently submitted this project to Dell's Social Innovation Competition. Voting ends today at 5PM CST. We were ranked as high as #4 out of 500+ projects but have slipped due to a flurry of last minute voting. We need to get back in the top 25 to advance to the next round. Please read our 250-word project description, register (takes 1 minute), and vote now.
Update: Thanks LazyMan for helping to promote the project.
