FINCA: Saving for the Future

FINCA: Saving for the Future
n its mission to alleviate poverty, FINCA provides poor women with credit, not charity. While a handout may alleviate a poor woman's distress temporarily, a small loan can help her to start or expand a business, creating a continuing source of income for her and her family. By saving regularly, the woman eventually outgrows her dependence on credit, too, using instead the capital she has generated and set aside.
Since FINCA serves the poor, our loans do not require credit ratings or collateral, they simply require that the banker save 20 percent of the value of the loan every four months. The result: after three years, the typical village bank member has acquired $300 of her own savings -- working capital that assures her financial independence.

From Seed Capital to Self-Sufficiency

FINCA provides a loan -- seed capital -- to the village bank, typically a group of 20-50 low-income women. Members receive individual loans to start or improve their businesses. Over a four-month cycle, members pay 16 weekly installments, including amounts for principal, interest, and savings amounting to 20% of the loan. Members' savings are deposited in the village bank's internal account, which they manage collectively, deciding how to use or re-invest. At the beginning of the next cycle, individual members receive a new loan, equal to the original loan plus the amount of savings they have accumulated. The four-month cycle of payments begins again. After the ninth cycle (three years), members will have saved the equivalent of US $300 of their own working capital. FINANCIAL INDEPENDENCE

SAVINGS

LOAN

Incentives to Save

Members deposit their savings in the village bank's internal account, which they reinvest, often earning five percent or more per month.
Loan amounts are based on savings; the more a member saves, the more she can borrow.
After three years, each member will have paid off her debts and accumulated, through savings, at least $300 of her own working capital.

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From Seed Capital to Self-Sufficiency
FINCA provides a loan -- seed capital -- to the village bank, typically a group of 20-50 low-income women. Members receive individual loans to start or improve their businesses. Over a four-month cycle, members pay 16 weekly installments, including amounts for principal, interest, and savings amounting to 20% of the loan. Members' savings are deposited in the village bank's internal account, which they manage collectively, deciding how to use or re-invest. At the beginning of the next cycle, individual members receive a new loan, equal to the original loan plus the amount of savings they have accumulated. The four-month cycle of payments begins again. After the ninth cycle (three years), members will have saved the equivalent of US $300 of their own working capital.	FINANCIAL INDEPENDENCE SAVINGS LOAN
Incentives to Save
Members deposit their savings in the village bank's internal account, which they reinvest, often earning five percent or more per month. Loan amounts are based on savings; the more a member saves, the more she can borrow. After three years, each member will have paid off her debts and accumulated, through savings, at least $300 of her own working capital.