What is financial inclusion?
What is microfinance?
What is Village Banking?
What is the average loan size of a FINCA loan?
How do FINCA clients use their loans?
What is a “social enterprise?”
Why does FINCA charge interest on their loans?
What is a “sustainable microfinance institution?”
Who funds the FINCA Network?
What is financial inclusion?
According to the World Bank, “Financial inclusion means that individuals and businesses have access to useful and affordable financial products and services that meet their needs – transactions, payments, savings, credit and insurance – delivered in a responsible and sustainable way.” FINCA is leading the way in expanding financial inclusion in underserved, low-income communities by providing access to credit, savings accounts, transfer services and insurance allows people to be more productive in their small businesses and to have more control over their livelihoods and lives. Approximately 2 billion people don’t yet use formal financial services.
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What is microfinance?
Microfinance is the provision of financial services to poor or low-income people on terms that they can afford. It is a means of promoting financial inclusion.
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What is Village Banking?
Village Banking is a methodology for delivering credit that FINCA International pioneered. It entails groups of 10-20 low-income entrepreneurs who meet weekly, biweekly or monthly to provide themselves with self-employment loans as small as $50 or $100 to start or expand a business while enjoying camaraderie and mutual support for business development. Since low-income entrepreneurs don’t have the kind of collateral most commercial banks require, Village Banking group members guarantee each others’ loans. And they run a democratic organization, electing their own leaders, designing their own bylaws, keeping the books, managing funds, supervising loan repayments and enforcing penalties for non-compliance.
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What is the average loan size of a FINCA loan?
FINCA’s average loan size is $831.
How do FINCA clients use their loans?
FINCA clients use their loans for a multitude of reasons. When poor people have access to financial services, like small loans, they can earn more, build their assets, and cushion themselves against external shocks. For example, they can invest that money to make their labor far more productive. They might buy a used sewing machine to make dresses faster than sewing by hand. They might invest in a used refrigerator to keep the food they sell from going bad overnight. They might buy weaving thread in bulk at wholesale prices to increase their profit margin on every item. Or they may use their loans to pay for employees’ salaries.
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What is a “social enterprise?”
FINCA defines a social enterprise as a revenue-generating business that provides goods or services intended to achieve positive social, community economic and/or environmental outcomes consistent with FINCA’s mission objectives.
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Why does FINCA charge interest on their loans?
FINCA charges interest in order to cover its costs and achieve operational sustainability. The interest charged on our loans supports our credit staff in the field, allowing us to bring services to customers, even in remote areas; enables us to borrow, re-lend and repay commercial capital, which means we can reach many more low-income customers; and ensures that we remain a reliable resource for our customers. Before we lend to customers, we provide training that ensures they understand not only our rates, but what it will mean for them and their business to invest and repay a loan. Interest rates vary greatly around the world and reflect a variety of factors, such as local regulations, the type and size of the loan, prevailing inflation rates and local costs of borrowing.
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What is a “sustainable microfinance institution?”
FINCA Microfinance Holding Company (FMH) strives to build permanent local microfinance institutions. After an initial investment, these institutions require no outside subsidies, and can cover their own operating costs with the income they receive from doing business. Because they are sustainable, FMH subsidiaries provide a constant, reliable source of microfinance products for low-income customers in the communities where they operate.
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Who funds FINCA Network?
The FINCA network is funded through donations, social investment and loans.
Donated funding comes from a variety of sources, including governmental development agencies, private foundations, corporations, service and religious organizations, and individual donors.
Donated funding comes from a variety of sources, including U.S. and international governmental development agencies, private foundations, corporations, service and religious organizations, and individual donors.
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