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| What is Grameen America? |
Grameen America is a company that has been established to enable poor people in the United States to escape poverty through self-employment and entrepreneurship. Grameen America provides loans, savings programs, credit establishment, remittance services and other training to its customers. [Top]
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| How is Grameen America related to the Grameen Bank? |
Grameen America is built on the success of the Grameen Bank, the most widely recognized microfinance organization in the world. The Grameen Bank has over 7 million borrowers and has disbursed over US$6.5 billion (2007). The Grameen Bank was created in Bangladesh by Professor Muhammad Yunus and as a result of its success, the Grameen Bank and Professor Yunus were jointly awarded the 2006 Nobel Peace Prize. Microfinance organizations based on the Grameen Bank model and supported by its international affiliate, Grameen Trust, now exist in 38 countries. [Top]
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| How does Grameen America help its customers escape poverty? |
Grameen America’s core business is providing small loans to its customers so that they can begin or expand income generating activities. There is no limit on the kinds of income generating activities that can be financed with these loans. For example, a customer might obtain a Grameen America loan to fund the purchase of a food vendor cart, the operation of a home day care business, operation of a cleaning service, or buy a sewing machine for a tailoring business.
Grameen America provides a variety of related services to improve the borrowers’ chance of self-sufficiency by:
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Helping borrowers develop and improve credit history and credit score, enabling them to qualify for mainstream credit sources. Grameen America has a direct relationship with Experian and will be providing customer repayment data that will help the customer earn an acceptable credit score. |
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Promoting savings by our customers. These savings can become a key resource for customers as they grow their businesses or need funds for their families. |
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Providing financial education, training and credit counseling to its customers as an integral part of the loan relationship. These services are provided on a constant and comprehensive basis. [Top] |
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| What are the amounts and terms for Grameen America’s loans? |
Grameen America’s loans can be as small as $500 and as large as $3,000 initially. Typically, the customer begins with a very small loan and then qualifies for larger and larger loans as each loan is repaid. The increasing loan amounts help to finance the growth of the customer’s business activities over time.
Phased disbursement minimizes default exposure while creating the proper incentive structure for customers to reach ever higher levels of loan disbursement.
Loans are usually made for a term of one year or six months. These loans have an interest rate of 15%, which is far below the interest rates charged by check cashers, pay day lenders and other predatory lenders. There are no loan fees. The loans are typically repaid in weekly installments. [Top]
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What is the Grameen America group process for loans?
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Grameen America requires prospective borrowers (who are also savers) to form or join 5 member “groups” of borrowers that meet regularly. These groups are organized into “centers”, with up to 10 groups to a center, and there are weekly meetings of each center. The group and center model encourages and reinforces loan repayments and savings by participants and this model also serves as a cost effective tool for recruitment, screening, training and motivation of additional borrowers.
The meetings become a valuable source of peer and Grameen training about financial issues like credit scores, savings, and related needs like health and insurance. While members are individually responsible for their own loans, they are expected to voluntarily provide assistance to their peers where needed, developing a social network of voluntary mutual support. [Top]
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| Doesn’t recent experience in the U.S. demonstrate that the group model for lending does not work? |
While there are a number of microfinance organizations in the United States that have been inspired by Grameen Bank’s success, none of these organizations has combined the rigorous application of the Grameen model with management by Grameen Bank executives and large scale implementation. Grameen America will be the first microfinance organization in the United States to combine all of these elements. [Top]
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| What is Grameen America’s approach to encouraging savings by its customers? |
Customers of Grameen America must demonstrate a pattern of limited savings as part of their qualification for loans. In addition, savings are required during the life of each client’s loan relationship with Grameen America. More specifically, the company imposes (i) obligatory savings during the client’s initial "group training" period and (ii) obligatory weekly savings based on the size of the client’s loan.
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| Who are Grameen America’s customers? |
Grameen America’s customers are poor individuals who usually are below the poverty line, are frequently unbanked and do not have access to mainstream credit. They are predominantly women, though the company also serves men. As Grameen America builds its business, it will focus particularly on recent immigrants to the United States. [Top]
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| Where does Grameen America operate? |
Grameen America has begun operations with a pilot program in Queens, New York. The company plans to institute a second pilot program and then begin implementing Grameen America programs gradually across the United States. Among the areas currently under study are Arkansas, Louisiana, Nebraska, Florida and California. [Top]
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| How is Grameen America funded? |
Grameen America is obtaining grants, donations, loans and equity investments from individuals and institutions. Tax deductible contributions may be made to Grameen America, Inc. [Top]
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| How does Grameen America make money? |
Grameen America’s principal source of revenue will be the interest paid by borrowers on their loans. Interest income will provide both the revenue to support the management of the business and along with loan repayments will provide capital for additional loans.
Grants, donations and loans from individuals and institutions also will support the growth of Grameen America: Equity investments in the company will provide an additional source of capital. In addition, Grameen America will be developing partner and affiliate relationships with companies that are interested in serving Grameen America’s customers.
In time, Grameen America will establish itself as a bank or credit union with the ability to accept savings and banking deposits. The assets acquired through these deposits will provide additional capital for loans to customers and thereby facilitate the generation of additional interest income.
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| What is the poverty threshold in the United States? |
Grameen America uses the U.S. Census Bureau’s figures and methodology for determining poverty. The U.S. Census Bureau bases poverty on income, number of people in family, age and other variables. To learn more about how the U.S. Census Bureau calculates poverty, please visit the following link: http://www.census.gov/hhes/www/poverty/threshld/thresh07.html
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