If you live in a third Third World country, have bad credit and need a loan, UC Davis’s very own Microlending Club just might be able to help.
Founded in spring of 2009, the Microlending Club sends microloans to third Third World entrepreneurs who do not qualify for bank loans to start up their business. The philosophy is that by helping out one individual out of poverty, it may lift the entire community out of poverty as well.
Microlending is defined as the provision of small loans to entrepreneurs in developing countries at zero or close to zero interest, said Avinash Mohanani, a senior managerial economics and communication double major.
“The idea is that 200 dollars in a developing country is worth a lot more than 200 dollars in the United States,” Mohanani said. “This [would] be enough money for someone to start or drastically improve their business, allowing them to increase their income, pay back the loan in a reasonable time span and help provide safer living conditions for their family.”
In almost a year, the club has sent over 200 dollars to four different entrepreneurs in various Third World countries. These entrepreneurs have spent their loans on various businesses, including raising chickens and sewing dresses.
“We can’t claim to have made a difference in Third World countries, but I think it matters to the four entrepreneurs we’ve lent to who wouldn’t have been able to get a loan through a bank because they aren’t considered ‘creditworthy,'” said Jessica Bolanos, a junior economics and Spanish double major and co-president of the Microlending Club.
Although the club has barely a dozen members, its potential impact is paramount to helping some break free of poverty, Bolanos said.
“Giving a small loan is a way of helping entrepreneurs sustain themselves, working from the bottom up,” Bolanos said.
The difference between this club and a charity is that the money sentd to other countries will be paid back in full.
“It’s important to realize that it’s not charity, but an actual loan that will be repaid,” Bolanos said.
The idea of microlending began in Bangladesh, where Muhammad Yunus, a banker and economist, developed the idea of microcredit and founded the Grameen Bank, the first microfinance bank in the world. He won the Nobel Peace Prize in 2006 for his efforts, Mohanani said.
To help raise money, the Microlending Club hosted a weeklong competition called Gumball Challenge in January.
“Picture a gumball machine. A small input of money moves one gumball out of the machine and at the same time moves all the other gumballs closer to the exit,” Mohanani said. “In the same way, a small amount of money moves a person in a developing country out of poverty, but it also affects entire communities.”
Four teams signed up for the challenge and each were loaned $27, the same amount Yunus gave out for his first loan. Teams had a week to turn that initial loan into a running business to make more money.
Some teams held bake sales while the winning team, The Wellmen, hosted “Pong for the Poor,” a beer pong tournament to raise money.
Junior managerial economics major Daniel Mesghina, who joined the Microlending club last quarter, believes that their work in other countries is what makes the club special.
“We try not to make the club about us but about the people we are helping,” Mesghina said. “The group isn’t extremely big or extravagant – it is just a group of driven individuals who really care about a cause.”
For those interested in joining the Microlending Club, meetings are held every other week. Students can check out their Facebook group for more information about future fundraisers, events and gumball challenges.
NICK MARKWITH can be reached firstname.lastname@example.org.