#3 - what is micro-finance?
May 15, 2019
Micro-finance is a general term describing financial services offered to those living below the poverty line. Micro-finance is an umbrella term that includes micro-lending, micro-savings, and micro-insurance.
Micro-finance goes beyond philanthropy—it is a powerful, sustainable tool for social and economic transformation. In impoverished regions where banks are unwilling or unable to extend credit, micro-finance offers opportunity to those who would otherwise be excluded from traditional financial resources.
Recycling of money is what makes micro-lending special and effective. Just like traditional loans, micro-loans are extended with the expectation of repayment. A dollar lent out has the potential to assist an infinite number of individuals - not just one. For example, say $500 is lent out to an entrepreneur in Guatemala to buy tools for their auto-repair shop. Once that $500 has been repaid, the same money can be lent out to another individual to invest in their business, home, or community. In the end, micro-lending is a sustainable way to foster economic and social empowerment. A small amount of money can have a large impact.
How does this connect to the Radical Coffee Project? Our mission is to (re)connect communities through an honest transaction. So, after purchasing, importing, roasting, packaging, and shipping coffee straight to your doorstep, all proceeds are used to fund micro-loans to support aspiring entrepreneurs in the communities we primarily do business in—Guatemala and Detroit. And yes, you read that right. The Radical team does not even take a cut.
We started lending in 2009, long before we started selling coffee. Since then, we have extended over $100,000 in interest-free microloans to over 3,000 entrepreneurs in 72 countries —more than 99% of those have been repaid! Each time a bag of Radical Coffee is purchased, you directly fund opportunity.
We believe that we, as a business, have a responsibility to support the communities we work and live in. What better way to empower and (re)connect communities than investing in the human potential of fellow entrepreneurs? A business investing their profits into communities? How radical is that? :)