Blog Entry 5

How do you think a microlending program may work in the United States versus a developing nation? How did you experiences in Belize help you draw these conclusions?

I think a microlending program in the United States wouldn't necessarily Not work, but it would operate much differently than a program in a developing nation. For instance, Belize has a smaller population which means less competition from large companies like Walmart. Loan money is targeted for small businesses, many of which are in the food industry, clothing, and agricultural industry. Loans in less developed economies have high success rates because it is easy for recepients to pay back their small loans and quickly turn a profit without much government involovement. In the United States beginning a small business requires more capital because there are more issues with licensing and paying taxes. In a developing nation a loan recipient could receive a relatively small amount of money that could go toward a building, or a piece of vital equipment that can transform a business. The same amount of money in the U.S. would not be able to buy a small building and therefore would not be able to support a new business. From my experiences in Belize I have not seen monopolized companies such as McDonald's, Walmart, etc. and this leaves a lot of room for small businesses to capture the small population without stepping on each other's toes.

If a microlending project were to work in the United States, it would have to be in an area with a low amount of large company competition and in an area with lower income levels. From what I saw in Belize, loan recipients are specially targeted because they are determined to pull their families out of poverty, so they do whatever it takes to make their business work in a community effort. Belize Enterprise for Sustainable Technology tailors their loans to their clients. The same customization would have to apply for a non profit group in the U.S. and it would require more money and more thought out business ideas to work around the competition but I do think it is possible.