Grameen Microlending Succeeding in Queens, New York

Muhammad Yunus, known as the "banker to the poor" and Nobel Prize Winner, brought his Grameen Bank to Queens, New York, about a year ago. In that time, some 600 borrowers (mostly women) have benefited from micro-loans (a few hundred to a few thousand dollars) that have allowed them to start or expand their small businesses. Thus far and despite the bad economy, the repayment rate on these loans is roughly 99%. If the small business owner is the backbone of the American economy, these micro-loans seem to stiffen that spine.

When one thinks of the current situation in New York's financial sector, a feeling of queasiness radiates from the gut to the extremities due to the rash of lousy news over the last several months. Not so for Grameen America, as the local operation is known. Professor Yunus told reporters at a street fair where 100 or so Grameen borrowers were selling their food, flowers, jewelry and clothes, “While other banks are collapsing, this one remains strong. Microcredit has been one area the crisis has not impacted. The crisis has not touched it, still it is robust as ever.

For a lot of these borrowers, a traditional small business loan is out of the question. Poor credit history, lack or revenues and other factors have prevented them from getting access to funds until now. Reuters reported on one woman, Zemia Shoffner, who was in that boat. But with a $2,000 loan from Grameen, she took a baking class to improve her catering abilities, and business is better. She told Reuters, “I have been running my business for about three years now and (the course) meant a lot because it makes me more marketable. "This has really allowed me to live my dream. I had another job and I wasn't really happy, so now I really have the freedom to pursue my passion. It means everything.”

Grameen America's deposit base comes from donations and repayment of the loans. It hasn't got its credit union license yet, so it deposits to expand aren't available. To borrow, a customer must have 2 forms of ID and a tax return to show her financial status. Also, they have to open a bank account and deposit $2 a week in addition to making loan payments. Two bucks doesn't sound like much, but it creates a habit of savings, according to Grameen.

© Copyright 2009 by The Kensington Review, Jeff Myhre, PhD, Editor. No part of this publication may be reproduced without written consent. Produced using Fedora Linux.

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