FINAM began as a non-profit microcredit lender with a $500,000 US loan from the Inter-American Development Bank (IADB). IADB has since provided FINAM with another loan of $500,000 US. FINAM has made over 20K microcredit loans and have 2000 women in their database. The loan recipients tend to exit the FINAM system since they gravitate to regular banks after having established good credit by paying back their loans to FINAM. Thus, FINAM is always looking for new women that meet their criteria.
Approved applicants are typically given loans worth $100,000 Pesos ($200 US). Historically to qualify for FINAM loans, applicants must
• Have no outstanding debt. Women with existing debt find it nearly impossible to pay back the FINAM loan, as existing debt rates are typically debilitating.
• Have been in business for 1 year. FINAM has traditionally felt that businesses that have been in business for more than 1 year are more likely to sustain themselves, therefore enabling them to pay back the loan.
FINAM charges 3% interest per month, which is consistent with the normal, maximum lending rate of local banks. Though it may seem high, this policy is good because it trains women to succeed within the system. Loans are made for a period of 3 months to 1 year. Less than 5% of all FINAM loans are defaulted and in the case that a woman is unable to pay, others in her group will cover her debt, thus creating peer pressure to succeed.
The average loan recipient is 50 years old. They want economic self-sufficiency. They want their children to be educated. They want respect.
The $5000 US that was provided to FINAM by TIAW has so far gone to support 20 Chilean women. With the TIAW grant, FINAM was able to forego the “1 year in business” requirement and to loan money to women just starting their enterprise. The women that received the TIAW-sponsored loans had taken training (both administrative and specialty-specific) in advance. Institutions other than FINAM provide the training. In fact FINAM made a deal with the Regolato Municipality to provide the women just finishing training with loans to start their businesses. Of the 20 women that were lent money from the TIAW grant, 3 have already paid back their loan and are on their second loan from FINAM.
Following the visit to the FINAM office, we visited 2 home-based businesses of women who had received loans from TIAW’s grant.
VISIT TO BEAUTY SALON
PARTNERS:
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Jimena de la Fuente Vejar
Status: Married
Age: 45 Years Old
Borrowed: $100,000 Pesos ($200 US)
Pays Back: $10,000 Pesos per Month ($20 US)
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Business:
Beauty Salon
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Cecilia Ivonne Balague Veliz
Status: Married
Age: 42 Years Old
Borrowed: $100,000 Pesos ($200 US)
Pays Back: $10,000 Pesos per Month ($20 US)
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Jimena said she had always dreamed of being a hairdresser but never saw how it could be possible. But<
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