Microbanking began in Bangladesh in 1976 with the Grameen Bank,
which now operates successfully in many countries around the world.
Microbanks lend small sums of money, often as little as $125, to
people who possess skills and a sound business plan. Due to lack
of collateral, these people are unable to secure loans through the
traditional banking system. Micro-banks lend money to individual
entrepreneurs in groups of five, each member being responsible for
their own loan. All 5 members in the group must repay their loans
before any one-individual can re-apply for the next level of funding.
In this way they use each other as collateral for their loans. This
proven method has boasted over a 95% success rate in repayment and
Microbanks | How it Works
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