What is a Micro Loan?

A micro loan refers to a small, low-interest loan (up to $2000 initially at GEODE) for the purpose of helping individuals start or expand their business.

Micro loaning, as a means of spurring entrepreneurial opportunities, is a concept largely credited to Muhammad Yunus, a Nobel prize winning economist from Bangladesh who founded the Grameen Bank.

Micro loans are ideal for individuals who would otherwise not be able to raise funds through traditional lenders. Would-be entrepreneurs who have a poor credit history or no credit history and/or no collateral can still secure a micro loan through GEODE, providing they complete the Stepping Stones Business Training Program and have a solid business plan.

These loans can be used in any way, as long as the funds are being applied directly to the business. By securing and repaying these small loans, entrepreneurs can develop a sense of pride and accomplishment while establishing or improving their credit history.

Solidarity Lending

Because microfinance lending does not require collateral, a key component to their success has been solidarity lending.

Micro loan recipients join 'Peer Lending Circles' which act as support to repay the loans. All successful loan recipients are eligible for further micro loans ($2000 and then $3000) but only once all members of the Peer Lending Circle have repaid their initial loans. This system has been highly successful throughout the world because it encourages entrepreneurs to work together to aid their peers in succeeding.

Peer Lending Circles have other benefits. Click here to learn more about Peer Lending Circles as they pertain to GEODE's Stepping Stones program.