Microfinance

We are inspired by microfinance as a model for effecting social change.

Microfinance is the act of making small loans, or microcredits, to low-income entrepreneurs to start or expand their businesses. The idea is that they can then accumulate wealth and sustainability, and in turn increase their options and reduce the risks they face daily.

The Impact

Why is micro-lending so important? Well, in many developing countries, most banks will not give a loan to low-income entrepreneurs either because the amount is too low, or the investment is perceived as being too risky. Entrepreneurs then have to resort to informal arrangements with money-lenders, who charge extremely high-interest rates, leaving the poor entrepreneur without much revenue.

Microfinance allows low-income entrepreneurs to access small loans, at low interest-rates; allowing them to actually generate some sustainable revenue. Amazingly enough, microfinance has shown to have a 97% repayment rate, showing that poor people can be trusted to pay back their loans. (United Nations Capital Development Fund)

The Muhammad Yunus Story

Muhammad Yunus, who founded the Grameen Bank and won the 2006 Nobel Peace Prize, made microfinance famous. With just an initial $27 loan to a group of 42 Bangladeshi women, Yunus started what eventually became be the Grameen Bank. Now having lent over 6.3 billion dollars to 7.2 million borrowers with a repayment rate of 98.6%, his organization is living proof of the power of microfinance.

Gumballs and Microfinance?

Gumball Capital supports microfinance as a launching pad for social impact. Through the model of microfinance, we believe we can inspire college students in the Gumball Challenge to engage in amazing entrepreneurial endeavors in service of the common good. Moreover, through the Gumball Fund, we hope to use microfinance to bridge the impact of micro-entrepreneurship between student and developing-world entrepreneurs.

Though whether it’s through the Gumball Challenge or the Gumball Fund, we believe that each individual has the potential for great success. As Muhammd Yunus once said, “Unleashing of energy and creativity in each human being is the answer to poverty.”