NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, November 11, 2013

When you hear “It’s not about the money,” rest assured it is about the money. Yes, this blog is about money, specifically micro-lending – and it’s not about the money. Micro-lending is about lending small amounts of money – the SBA’s limit was around $25,000 and has been increased to $50,000. For most people, the term ‘micro-lending’ connotes lending micro amounts of money to low-income people to help them build a micro-business. When entrepreneurs achieve these modest goals, everyone heaves a sigh of relief. Is this a case of being satisfied with modest goals, i.e. aim low and settle for little?

I ran a micro-loan fund (along with a VC fund, a real-estate fund and a number of loan funds) in the ‘90s when the Clintons were popularizing them in the U.S. At the start, and to a great extent even now, micro-lending was considered to be an area where foundations and ‘do-gooders’ provide token amounts of funding to help lift people out of poverty. Mohamed Yunus became the face and leader of this industry when he started his Grameen Bank in Bangladesh and built a giant that helped lift people out of poverty. For his great achievements, he got the Nobel Prize. Well deserved.