Grameen America is a microfinance company whose mission is to help alleviate poverty through entrepreneurship by providing loans, savings programs, credit establishment, and other financial services to the working poor, especially women, in the United States. Grameen America is built upon the success of the Grameen Bank in Bangladesh. Founded by Professor Muhammad Yunus, the Grameen Bank is the most widely recognized microfinance company in the world. The success earned both Professor Yunus and the Grameen Bank the Nobel Peace Prize in 2006.
Grameen America has been created so that people with limited or no access to credit can use entrepreneurship and self-employment, proven means in the United Sates, for increasing wealth and escaping poverty. The poor are frequently prevented from pursuing entrepreneurship opportunities because mainstream banks will not make loans to people who lack minimum credit scores and collateral. These “unbanked” individuals typically have limited experience in understanding financial institutions, getting loans, building savings and managing credit. While conventional banks turn away these borrowers, the success of high-interest rate predatory lenders (often charging over 300-400% APR) such as payday loan corporations, pawnshops, and check cashers has shown that the unbanked constitute a highly valuable customer base.
Grameen America provides an alternative for these borrowers. Grameen America provides banking for the unbanked.
Accessible Microfinance is Necessary in America
The need for accessible microfinance in America is great. Despite being the world’s richest country, around 28 million people in the US are unbanked and nearly 45 million have only limited access to financial institutions. The problem is exacerbated by the US credit rating system which excludes all those who lack collateral, education, references or a banking history. The US financial system excludes the poor, especially recent immigrants, because they do not have credit ratings and cannot obtain them because they cannot meet some or all of the credit rating requirements.
According to US Census figures, some 36 million people lived in poverty in the United States in 2005. Among these poor persons, 8.7 million were first-generation immigrants and their family members. At a macro level, 20.4 million of the nation’s 36 million poor are women and 13 million of these women are in what the US Census Bureau has accepted as “deep poverty”. Of that number, 9.8 million are single mothers who are by far the poorest group with 38 percent living below the poverty line. This compares to 11 percent of all Americans who live below the poverty threshold.
Poverty in New York
- The NY State poverty level is 13.8% or approximately 1.7 million people.
- In New York City 650,000 people live below the poverty line.
- Women are particularly vulnerable to poverty, especially single mothers.
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Single working mothers numbered approximately 312,600 in 2000, making up 10.35% of total households in NYC. |
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A family headed by a single mother is 600% more likely to live below the poverty line than a family with a mother and a father. |
Grameen America will serve its clients, especially women by:
- Providing them with small loans so that they can start or build small or home businesses, with terms that are an attractive alternative to predatory lenders.
- Creating a culture of savings and individual responsibility in all clients.
- Establishing and improving client credit ratings so that clients can better participate in the mainstream American economy.
- Educating clients about getting loans, building savings and managing credit as well as mainstream financial institutions as a built-in part of the Grameen America lending program.
Queens Pilot Program
Grameen America is beginning operations with a pilot program in New York City. The first branch office has opened in the Jackson Heights neighborhood of Queens, and additional branches will be opened in New York during the next few years. Grameen America is likely to undertake a second pilot program elsewhere in the US and then begin a national rollout of its operations.
Funding
Grameen America is attracting grants, private contributions, loans and equity investments to support its initial development. Over time, Grameen America has been designed to become a national business that is self-sustaining and does not rely on grants or contributions for its operations.
Management
Grameen America is supervised by the most senior Grameen executives, including Professor Yunus and Professor H.I. Latifee, the head of Grameen Trust. Local implementation of Grameen America's microfinance business is being led by an experienced Grameen manager, Shah Newaz, from Bangladesh to ensure that Grameen practices are closely followed. Ritu Chattree serves as Vice President and heads up Finance and Development. Vidar Jorgensen, an American businessman who has been the principal proponent of Grameen America, serves as President.
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