What is Microenterprise?
Microenterprise is the provision of small, fair credit loans to the poor to establish small businesses. As these loans are repaid, they are loaned again, creating a sustainable cycle of development. No hand outs, just a hand up.
Is it effective?
Microenterprise is one of the most effective ways to lift families out of poverty in developing countries. Loans from as little as $50 transform lives. Our Microenterprise programme has been running for almost 20 years with loan repayment rates of up to 98%, creating tens of thousands of jobs. As businesses take shape the first to benefit are the children.
How does it work?
Many of the world’s poor are self-employed. They sell and raise livestock, run market stalls, produce handicrafts and recycle rubbish.
The major problem these enterprising poor face is their lack of working capital. The World Bank estimates 600 million of the world’s poorest could create jobs and increase their incomes if they had access to affordable financial services. Today only 3% have access to fair credit. In many countries the formal financial sector does not extend to the poor. These people are left to raise credit from informal moneylenders, who charge exorbitant interest rates, sometimes as high as 1600% per annum.
Microenterprise seeks to address this problem by extending small, fair credit loans (typically $50 to $1000) and other financial services to poor borrowers for income generating, self-employment projects. This allows the poor to improve their standard of living for their families and their communities.
Microenterprise is more than just extending credit loans. It also:• Provides mentoring
• Gives financial advice
• Provides marketing training and leadership development.
The small business entrepreneurs work closely with trained loan officers who help them with their business. The focus is also not just on the financial improvement but a holistic approach. The impact of allowing these poor entrepreneurs access to fair credit provides them with the ability to make a lasting improvement as the increased income will enable them to afford food, shelter, education and healthcare. Other changes would include increased personal development, ability to offer community service and provide more jobs and a more self-sufficient community.
Participate. Tear Fund Opportunity International
TEAR Fund Microenterprise Trust Banks
A TEAR Fund Trust Bank is a group of 15-25 poor entrepreneurs who come together to receive Microenterprise loans, training and mentoring. A Trust Bank is funded by a single person, by a group of New Zealander’s, churches or businesses who want to make a real difference in many lives.
Trust Banks are comprised of poor people, who are rich in energy and ideas, but, without collateral or assets, can’t get a loan from the bank. Under the guidance of our local partner organisation, they form a group, appoint a leader and co-guarantee each other’s loans. They are each given a small loan to start or expand a small business and provided with business training. Repayments are collected each week.
This is a unique opportunity to learn about another country, to connect with a community from an entirely different culture and to share what you are experiencing with other people in your community.
To fund an entire Trust Bank $5,000 per year is needed for two years.
There are several ways to achieve this.
- Option 1: As an individual
- Option 2: Forming a group with friends, family or work colleagues
- Option 3: Supporting a Trust Bank through your business
There have been as many creative ways of raising funding as there have been Trust Banks supported. While some people can afford to simply write out a cheque, others take it on as a fundraising project enlisting support from business, church or community groups or holding fundraising events. Most people find the funds easy to raise if they keep their eyes on the group of people being supported and the difference it will make.
To support a Trust Bank or find out more, please phone Richard Barter today on
0800 800 777, or email microenterprise@tearfund.org.nz
You can support Microenterprise in several ways:
1. Regular monthly payments start at $25 a month.
We suggest $50 a month will enable two poor families a year to start income-earning enterprises.
2. Make a one-off donation.
A gift of $150 will establish a small business.
3. Support a specific project with a donation of $500 or more.
4. Support a TEAR Fund Trust Bank with a $10,000 donation over two years.
A Trust Bank can be supported by individuals, groups, churches and businesses in New Zealand, and will connect you directly with a group of 15 to 20 entrepreneurs.
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