Equal Opportunity Loans

Muhammad Yunus, a professor in Bangladesh, is the creator of a new trend in banking called microcredit in which poor people in countries around the world can take out tiny loans to start a small business. They need no background check and no collateral. There is no interest charged on the loan. The surprising thing is that most are paid back in a timely manner.

Until microcredit came along, banks only made loans available to people starting large companies. They were large loans requiring approval and were subject to all the things we've become accustomed to seeing like collateral, interest, and late fees. Now poor people are able to better themselves and their communities with small loans, usually less than $1,000, to open businesses like roadside fruit stands.

Because traditional banks don't usually offer microcredit, Muhammad Yunus founded Grameen Bank. He and the bank were jointly awarded the Nobel Peace Prize in 2006. Today the bank is operating about 2,500 branches in the poorest areas of Bangladesh serving approximately 80,000 villages. Surprisingly, the bank is 94% member-owned by people who either own no land or have less than an acre of land.

Most business owners worldwide are men, so of course most of the major loans are in a man's name. Microcredit is different. About 96% of loans are made to women. Women in poor countries traditionally oversee basic needs such as food and clothing, so of course the businesses started are things like food stands and clothing stores.

In 1974, Muhammad Yunus made his first personal loan during a time when Bangladesh was facing famine. Struggling citizens were turning to ruthless loan sharks for help, but it only made their situations worse. As a professor of economics, Yunus wanted to help these people because the real world they faced each day was nothing at all like the textbook ideas taught in his classes.

What shocked Muhammad Yunus more than the extreme poverty all around him was just how little the people needed to get out of it. He made his first loan to a group of 42 women for only $27. They were able to pay off the loan sharks (who were charging interest) and begin to rebuild their lives. When Muhammad Yunus approached a bank about making similar loans, he was denied.

Microcredit and the Grameen Bank were founded because of one man's passion to make a difference. Sometimes the smallest changes to a person's life can have the biggest impacts to an entire community. Muhammad Yunus believes that everyone should have the right to better themselves. Loans should be available to the rich and poor alike.

Microcredit banks are entirely opposite of traditional banks, yet the repayment of microcredit loans is still almost 100%. Even during times of disaster when richer nations would default on their loans, poor people strive to repay theirs through adversity. There are no lawyers, collateral, or interest, only hard-working people with the drive to better themselves.

By: Healthy Wealthy nWise

Muhammad Yunus is the creator of microcredit, which enables poor people in countries all over the world to obtain loans. Visit Muhammad Yunus to find out how Grameen Bank became a lifesaver for millions.

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