What Is Micro-finance?

This was the question I was asking myself when my accounting professor mentioned it in class. I did a little research and came across Muhammad Yunus’ book Banker to the Poor. Yunus is the founder of Grameen Bank, which gives microloans to the poor. So if you are interested is eliminating poverty, empowering individuals, and spreading peace, here are some things you should know about micro-finance:

What is a micro-loan?

Let’s start with dictionary definition: a very small, short-term loan at low interest, esp. to a start-up company or self-employed person. (dictionary.com)

Micro-loans vary in size depending on the individual’s business, how many loans they have already taken out, and where they are from. For example, a woman in Bangladesh might receive a $25 micro-loan to begin a basket-weaving company. A stay-at-home mom from New Mexico might need a $200 loan to buy a sewing machine. Micro-loans are unique because, of course, they are smaller than traditional loans. Poor individuals cannot afford to take out large traditional loans. Micro-loans allow them to borrow just enough money to start their business. Because the loans are smaller, the poor are more capable of paying them back.

What prevents the poor from acquiring loans from traditional banks?

Grameen Bank and other micro-finance institutions are not traditional banks because they are willing to lend money to the poor, individuals who often do not have credit or even steady jobs. Traditional banks (think of the bank you probably use such as 5/3 or Bank of America) are not willing to lend to the poor because the poor are traditionally seen as unreliable. However, as Yunus argues in his book, the poor are very reliable. They understand what is at stake if they do not pay back their loan. If a basket-weaver does not pay back her loan, she won’t be able to feed her family, send her children to school, and provide them adequate shelter.


How does micro-finance empower the poor?

The real question is: How does entrepreneurship empower anyone? Micro-finance institutions lend the poor capital to start their own businesses. People who have traditionally been denied loans can now become entrepreneurs. Entrepreneurship is empowering because, first of all, you are the source of your own success. Your business’ success is reliant on you, and when your business is successful, you feel successful. Entrepreneurship is more powerful than charity. Imagine the difference between a women who receives $20 as a charity and a women who earns the $20 herself. The women who earned her own money is more likely to work even harder to earn more money. She will feel empowered.

What does micro-finance have to do with Uncovered Artistry Boutique?

First, Uncovered Artistry will give micro-loans to an artisan who needs the fund to start his or her artisan business. Giving micro-loans allows us to support domestic violence survivors of any economic status.

Second, we encourage entrepreneurship! We hope that our artisans feel empowered because of their talents. Our mission is to help domestic violence survivors discover their "inner entrepreneur," empowering them both emotionally and financially. From this, we hope to promote peace in the lives of the artisans and our customers.

If you know of an individual who is a domestic violence survivor as well as a creator of beautiful artisan work, please have them visit our website at www.uncoveredartistry.com and send us an email at uncoveredartistry@gmail.com for an artisan application.

Angie Spoto
Co-founder of Uncovered Artistry Boutique