Small loans, big impact

Tonya Ward of Omaha has wanted to start a nonprofit organization, Energy Rescue, for the past couple of years.

Energy Rescue would provide assistance to people who couldn't afford their utility bills. But Ward, a single mother of two whose income falls below the poverty line, was unable to get a small bank loan to move her idea forward.

And without funding, she was helpless.

“No bank would help me,” she said.

That changed last month, when Ward received a $1,500 loan from Grameen America, the microfinance institution that opened its second U.S. branch on June 29 in Omaha. The first U.S. office opened in the Queens borough of New York City in January 2008.

Grameen America is a subsidiary of Grameen Bank, an international nonprofit lending institution that provides small loans to women living in poverty in 100 countries.

Muhammad Yunus founded Grameen Bank in Bangladesh in 1976. In 2006, Yunus and Grameen Bank jointly received the Nobel Peace Prize, and on Wednesday, Yunus was at the White House to receive the Presidential Medal of Freedom from President Barack Obama. The award recognized Yunus' efforts to alleviate poverty through entrepreneurship.

Grameen Bank says it distributes more than $100 million in loans per year and has a 98 percent repayment rate.

The Omaha branch, at 5002 S. 24th St., has issued loans totaling more than $100,000 to women in south Omaha in its first six weeks, said Habib Chowdhury, general manager.

To qualify for a loan, borrowers must form groups of five women from the same neighborhood. They must use the money for some type of entrepreneurial activity.

Grameen says it doesn't determine creditworthiness by collateral. Instead, loans are issued “based on trust and commitment — nothing more.”

Chowdhury said the groups meet weekly to support one another and their business ventures. “More people, more strengths,” he said.

Nineteen groups of borrowers have been formed in Omaha, Chowdhury said. With some of the money, women have started a cosmetic sales business and have purchased sewing machines or cleaning supplies to start their own companies.

Ninety-five percent of loan recipients have been immigrants, primarily from Latin America, Chowdhury said.

Borrowers can get loans for up to $1,500 in the first year and are eligible for larger loans after the initial loan is paid off. Loans have a six-month or one-year repayment period and interest rates of 7.5 percent or 15 percent.

Borrowers make weekly payments of 2 percent of the original loan amount plus interest, Chowdhury said. They also are required to save at least $2 per week, which is deposited in a savings account.

Ward and four other women formed the Grameen-Rosenblatt Women's Association in early July, and each woman received a $1,500 loan.

Ward said she used the money to join the Greater Omaha Chamber of Commerce and several women's business groups. She also used a portion of the money to become a Mary Kay cosmetics consultant to earn income while she works on Energy Rescue.

Ward said she makes weekly loan payments of $35, which will help her build a credit history. “I'm finally on the board with credit rating agencies.”

And for the first time, she said, she has money in a savings account.

The women in Ward's group plan to use their loans in a variety of ways. Cynthia Rojas, who wants to sell her artwork, will buy supplies. Reyna Riveros plans to expand the inventory of clothing and skin-care products that she sells at flea markets.

Maria Morales, who started a cleaning company in 2006, received a loan to purchase supplies, business cards, advertising and shirts for uniforms.

The money was the boost she needed to expand her business, Morales said. She now is working on a business plan with the Nebraska Business Development Center in order to apply for a larger loan from the U.S. Small Business Administration.

“It's almost too wonderful to be true,” she said.

The women agreed that meeting as a group has been helpful.

Yolanda Dias said the group has helped to open doors through networking. Dias, a seamstress, is working to start her own line of girls clothing called La Princesita.

The women in her group have become confidantes and friends, she said.

The meetings also ensure that everyone remains accountable and makes the payments.

Ward said her group wants to prove that “poor people are worthy to receive loans and can pay them back.”

Previously, many doors were automatically shut to her, Ward said.

“Grameen totally opened the door.”

Contact the writer:

444-1085, stefanie.monge@owh.com

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