MICROENTERPRISE - How does it work?
TEAR Fund Microenterprise philosophy:
• Affirms the dignity and inherent value of every poor person.
• Provides business loans, training & mentoring to create jobs for the poor.
• Creates Self Help Groups empowered to solve community problems.
• Receives matching grants which multiply gifts that are then reused as funds are reloaned.
• Is motivated by a Christian response to serve the poor.
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?
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:
For $25 a month you can contribute towards a loan that will start another entrepreneur on the road to dignity. You can help change the world for one family - and your donation will be re-loaned to help many more.