Last night I went to the nationwide screening of To Catch a Dollar: Muhamad Yunus Banks on America. The film and panel discussion that followed reminded me of what powers microfinance: people.
Vidar Jorgenson talked about the power of group lending; Suze Orman talked about investing in people who need a chance; and Premal Shah talked about the power of the internet community. The tool they praised is a very small sum of money. And the belief they shared is the faith in people to borrow it, lend it, grow it, earn it, and return it.
What struck me is that Shah compared the microfinance movement to solar and wind energy, a small but high-impact tool that can change the world. But microfinance in the U.S. isn’t about new technology or a new way of doing things- it’s about a sustainable and responsible way of doing business that is older than Kiva, Grameen, or the idea of microfinance. It’s as old as banking. Microfinance is relationship-based banking that harkens back to an era when bankers knew their customers, their businesses, and their community. So in some ways, what’s old is new again. (And cool.)
In my year at Opportunity Fund, I’ve shared an open office on the 17th floor of 785 Market St in San Francisco and listened all day-long to what makes microfinance effective: taking the time to talk. Every day loan officer William Cardenas, who sits across from me, talks to entrepreneurs from all corners of the Bay Area in search of capital to grow their small business. Sometimes they come into the office, sometimes William heads out to “walk the block” and meet with them, and sometimes they have a conversation on the phone where he sits down with a client and talks to them. Looking over the loan application, he asks questions and learns what’s behind the numbers and answers on the form. When a credit score looks poor, he asks what’s behind it. When an answer is missing, the application doesn’t get dismissed, he asks why it’s missing and helps the client get to the answer, even when it takes a few days and follow up calls. Most importantly, when a client request a large loan amount, he sits with them to look sort through their income and business and helps them find a loan amount that will make an impact but one that they can actually repay.
Time and talk are expensive - much more costly than the return a $5,000 loan at 8% interest makes. That’s why microfinance needs to be a movement, funded by people who believe in relationship-based banking. In my job, I go out in the field two or three times a week to meet borrowers who have received a loan from Opportunity Fund in order to interview them and write a profile to share with our supporters in our newsletter, in a grant report, or on Facebook; or we send it to the CRA officer at a local bank who helps get us the loan capital we need to lend; and I’ve helped 14,534 Kiva lenders invest $479,675 in 83 Opportunity Fund clients by sharing these stories since we became a Kiva Field Partner back in 2009.
For 15 years, people have invested in Opportunity Fund and we’ve been investing in the Bay Area’s people. When our clients share their excitement with me about what a loan has done for their business or their family, it’s not Opportunity Fund or the loan amount that they recall- it’s William, and the time he spent talking with them. That's why microfinance is a growing movement: it's powered by great people.