“The fundamental premise of microcredit is that people can improve their incomes through hard work if given small loans to strengthen their businesses. This premise has been proven true by millions of borrowers who are now building their tiny businesses, supporting their families, and repaying their microloans so that others can have a chance at the one break they too need to succeed. The borrowers are actively changing the futures of their families, instead of begging or helplessly waiting for the next installment of charity aid, which may never come.”
(Eric Smith, 2007, p. 35)*
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Microloans are a viable, empowering anti-poverty solution that helps families stay together and gives men and women the opportunity to take pride in their work. Our interest-free loans range from US $15.00 to $5,000.00. The average loan is $300.00. Most loans are for land cultivation, home improvements, and creation of sustainable small businesses. The length of the loan is, at most, three years, and 75 percent of the loans are repaid within 18 months.
Milpa Loans: We believe that the best way to help a family is by providing opportunity for employment so that the family can take care of itself—buy their own food, send their children to school, etc. However, the reality in El Triunfo is that, because the people do not own land, they cannot grow their own food. Therefore, they have to work for other people’s farms and and purchase their food at local stores. Our milpa loans go toward helping families grow their own food in a sustainable manner. A family needs approximately $200.00 to manage a small one-block corn farm (Milpa). In a good season, the milpa can produce enough corn to not only feed the family for an entire year, but also sell in markets and provide seeds for the next season.
Start-up Business Loans: This is our second largest group of loans. Ten of the fourteen small stores in El Triunfo began with loans from the Guatemalan Project. In some cases, only $100.00 was needed and in other circumstances, $500.00 was given. The stores sell food, including items such as rice, beans, and salt. There is one clothing store, which sells second-hand garments. Other loans in this category cover the expenses of purchasing bicycles or motorcycles for transportation to the place of work.
Home Improvement Loans: This is our third largest group of loans. The loans range from $250.00 to $1,000.00. For the most part, loans help families to add a room to their homes or expand their kitchen space. Some families purchase water containers, aluminum covers for the roofs, or washing basins for washing clothes and dishes. These loans are important in improving their living conditions.
Emergency Loans: These loans are mostly to cover the cost of purchasing medicine during illnesses or for health operations.
Educational Loans: Although the Guatemalan Project funds education scholarships, the need is much greater than what it can currently cover. Many families take loans to cover the cost of sending their children to school. The cost of one year of middle school is approximately US $450.00 and the cost of one year of high school is US $550.00. The cost of vocational training in the city of Zacapa is approximately US $2,000.00 per year due to the high cost of room, board, and transportation to Zacapa.
Personal Loans: Given for a variety of reasons, including court costs, legal costs, and license costs.
*Smith, Phil, & Thurman, Eric. (2007). A Billion Bootstraps: Microcredit, BarefootBanking, and the Business Solution For Ending Poverty. United States: McGraw-Hill.