MICROFINANCE PAPER WRAP UP: “Microfinance in the United States: Early Impacts of the Grameen America Program,” Published by Manpower Demonstration Research Corporation

This a summary of a paper by Kelsey Schaberg, Victoria Quiroz-Becerra, Toni Castro-Cosio, Stephen Nuñez and Richard Hendra; published by the Manpower Demonstration Research Corporation; March 2019; 34 pages; available at: https://www.mdrc.org/sites/default/files/Grameen_Report_final-web.pdf

Grameen America is an NGO that provides loans to low-income female entrepreneurs in the US. Women apply for loans as a group of five, and if approved, loans are distributed on an individual basis. However, if any member fails to repay her loan, other members cannot receive further loans until that individual’s loan is paid. To form a group, the members must know one another, live close to one another, and be able to confirm each other’s involvement in the business for which the loan is intended. Group members may not be from the same family.

Once approved to receive funding, each group must attend training for two hours per day, for five days. Thereafter, the group meets weekly to make repayments. At these meetings, each borrower also is required to make deposits of unspecified amounts into a personal savings account. The borrowing groups also meet with each other, creating support networks of up to 30 entrepreneurs. Grameen America reports a repayment rate of 99 percent.

Compared to a control group, the researchers found that Grameen America clients were 13 percent more likely to feel that they had money to pay for essentials. These clients also reported fewer “material hardships” such as lack of funds to meet unexpected needs. The number of respondents who were self-employed while also employed by another party was 7 percent higher for Grameen America participants than for the control group. The authors also used credit scores from US-based VantageScore to evaluate the program. Seventy-eight percent of Grameen America group members qualified for a VantageScore, compared to 56 percent of the control group. Grameen America members also were 6 percent more likely to have a “prime” VantageScore of 650 or more than were members of the control group

By Tiannah Steele, Research Associate

Sources and Additional Resources

MDRC publication
https://www.mdrc.org/sites/default/files/Grameen_Report_final-web.pdf

MDRC homepage
https://www.mdrc.org/

Grameen America homepage
https://www.grameenamerica.org/

Grameen Trust homepage
http://www.grameentrust.org/

VantageScore homepage
https://www.vantagescore.com/

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