FREQUENTLY ASKED QUESTIONS
1. What is Micro-Enterprise Development (MED)?
MED is the provision of loans, financial services, training, and mentoring to develop very small businesses and build community.
The poor have few options for credit. Without collateral or a credit history, they have no access to commercial banks and are forced to borrow from loan sharks and cooperatives that charge exhorbitant interest rates. MED addresses this problem in a way that treats the poor with dignity, meeting their needs without creating dependency.
Loans are made to individuals within a group of around 20 people. Group lending programs are designed to foster trust and community building with loans being co-guaranteed by the other members of the group.
These loans are typically used to begin small individual businesses. A micro-enterprise usually employs no more than 10 workers, and would typically include the owner and their family. Often savings can be collected within the group, where business training, peer consulting and networking also takes place. Importantly, around 96% of loans by Christian MED organisations are repaid in full.
Christian MED organisations like Bridge of Hope take a holistic approach to transforming lives. Whilst economic change for the poor is an obvious priority, our aim is to seek and facilitate change in every aspect of life - economic, social, and spiritual - for both the individual and the community.
2. What size loans are provided?
A series of loans are provided, with the first loan the equivalent of $80AUD, 2nd loan $100, 3rd loan $130, 4th loan $160, 5th loan $200.
3. How many loans are provided?
Clients can receive up to 5 loans.
4. Does BOH make individual or group loans?
Loans are made to individuals. However individuals are placed in a group of 10-20 people. Each member of a loan group co-guarantees the other's loans.
5. What rate of interest is charged?
Clients are lent money at the prevailing bank rate. Interest is charged because it helps to make the program sustainable. It helps to cover overheads and wages of staff, thus freeing up the capital to be lent and re-lent. The rates charged by loan sharks and cooperatives is often well over 300% p.a.
6. How can a person get a loan?
Generally BOH loan officers identify needy areas and approach prospective clients. Some people approach BOH directly.
7. Does BOH lend to people of different religions?
Yes, loans are made to Muslims and Christians.
8. What sort of businesses are the loans used for?
Small businesses such as:
i. roadside stalls selling basic produce items
ii. clients who make chicken satay sticks and sell them in Manado
iii. female clients who cook fish caught by their husbands and sell them in
surrounding villages
iv. motor mechanics
v. printing businesses
vi. tailoring business
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