Sunday, September 6, 2009

The Power of Microcredits

The Power of Microcredits

December 11, 2006 by admin
Filed under Entrepreneurship

I mentioned microcredits yesterday. The idea is to extend very small loans (microloans) to people who would have no capacity whatsoever to get loans through traditional means. Microcredits are targeted to the unemployed and poor, primarily focused on developing or under-developed nations where so many entrepreneurs can’t get their businesses started.

In November I read an article in the Montreal GazetteThinking small: Rooted in South Asia, Microcredit movement’s branches have spread to Quebec. The article was about Mohammad Hassan who started Jobra Centre, Inc. in Montreal, an organization that helps with the microcredit process (which they call “community loans” locally.)

In a developing country, a microcredit might be as small as a couple hundred dollars. In Canada, anything under $20,000-$25,000 is considered a microloan. $20-$25k is still a good chunk of change, but with the right government programs and corporate involvement, it wouldn’t be hard to give out a lot of good loans to people.

It’s already happening too. The article references one success story in Montreal, a diaper company called Bummies. It got off the ground with a loan of less than $25,000 from l’Association Communautaire d’Empreunt de Montreal (ACEM). Bummies now does over a million dollars in business, and supports 30 stable jobs. That’s amazing.

The more I think about microcredits the more excited I get. I wonder if my donations to developing nations would be more effective in the form of microloans versus hand-outs. What if I banded together with a few other entrepreneurs and we started finding ways of loaning small amounts of money to entrepreneurs all over the world? I’m not talking about $25,000 loans, I’m talking $500 loans. I can’t get this idea out of my head…

I love the idea of microcredit – both locally and internationally. Sure, an entrepreneur in Canada or the US is unlikely to get far on $500, and I don’t have $20,000 to give, but there’s absolutely no reason I can’t be an advocate to government (and wealthier friends/contacts) about supporting this idea. And internationally it seems obvious that microcredit can be successful.

Entrepreneurs are always your most passionate, aggressive and success-focused people. Entrepreneurs exist in all colors, shapes and nationalities. Point anywhere on the map and there’s bound to be an entrepreneur there itching to get started. They create jobs. They create wealth. Entrepreneurs can pick themselves up by the bootstraps and make something happen, and in doing so, they pick up everyone else around them.

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