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Starting Your Own Microcredit or Microfinance Franchise

microfinance, microcredit


  1. My dream for microfinance
  2. The microfinance podcast
  3. The problem of microfinance
  4. A solution to the microfinance problem: franchising
  5. Resources: Microfinance franchise

My dream for microfinance

From the day I heard about a strange little thing called micro-finance (or micro-credit) I’ve had a dream to create an organization which would participate. It usually takes me a few years to make a dream this big turn into a reality. There’s the day-dreaming, the peripheral research, the active research, the “holy crap, this could actually work” phase, the planning, and then the doing. It’s a long process, but I’ve done it before, and I will do it again, over and over and over again.

The problem (there’s always a problem, isn’t there?) is I don’t know squat about the intricacies or processes of a lending organization. I’ve never worked at a bank. I’ve never been an accountant or bookkeeper, and honestly, I hate doing my own finances.

But, what I do love is the amazingly massive amount of good will and huge PEVZ created by microfinance. As an entrepreneur, I’m always looking for new ways to create wealth; not just for myself, and certainly not only the economic kind. The holy grail of my passions have to do with combining life enhancement (via psychological, identity, or just “life” coaching), economic viability, entrepreneurship, and teaching. For me, that is what microfinance is all about.

Have you ever watched the faces of students who understand geometry for the first time?

Have you ever given money anonymously to you someone who’s been financially troubled? Then, they see you one day and they talk about some anonymous donor who changed their lives for the better.

Have you ever given a soccer ball to a kid who’s never seen one before?

In every circumstance, you’ve changed their world. You’ve created “wealth”. It didn’t exist before, but you just created it out of thin air. It’s amazing to watch their worlds change for the better, and being a part of life-changing endeavors has always been my goal.

The microfinance podcast

What sparked my interest in microfinance lately was listening to a podcast (attached to this article) series put on by the Stanford Technology Ventures Program. It’s a podcast stream titled Entrepreneurial Thought Leaders and this particular one was “The Microfinance of Entrepreneurship, with Geoff Davis (Unitus)”.

Here it is: (Update: Unfortunately this podcast was lost in the transition to a new blog theme. It may be available by searching Google or Stanford Technology Ventures Program site.)

The problem of microfinance

The problem Mr. Davis mentions in this podcast is the trouble with the microcredit organizations in their attempts to reach those who need microfinance. The statistic he gave was that microcredit organizations, both non-profit and for-profit, are only reaching 20% of the people who need it.

Let’s just stop there. If you don’t already know this, microfinance is a 30 year old industry. This is not a new industry, folks. And in 30 years the industry as a whole only has a worldwide 20% market penetration. Amazing.

It sounds like an industry failure to me. I mean, when you’re not reaching 80% of the people who would gladly take you up on your services, regardless of whether it’s for or non-profit, you’ve got some issues to solve.

A solution to the microfinance problem: franchising

Now, these problems aren’t insurmountable. One of the reasons why there’s only been 20% market penetration in microlending is that up until recently it has been attempted by non-profits only. The biggest reason why this is an issue is that non-profits generally rely on either government grants or big financial backers who essentially have disposable income they are willing to donate instead of invest or purchase stuff with. Unfortunately, that severely limits how much money can get into these organizations which, in turn, limits their possible expansion and growth rates.

Blech, that was a lot of college-word terminology all to say they don’t have the clink to grow fast enough.

So, what’s the solution? Microfinance franchises could most certainly be one.

It solves two issues:

  • Decentralization of “retail” outlets. Each new “retail” outlet is its own business and therefore has little reliance on centralized overhead and structure.
  • Turning into a for-profit enterprise means you get access to the big money through capital markets like the stock market, etc.

So, the biggest response that immediately comes up is “But you’re taking a socially-good idea and now making money off of it? Isn’t that seriously wrong somehow?”

I answer a hearty “Absolutely not!”

Making money is the primary goal of for-profit organizations, for sure. But, I’ll take a set of for-profit companies changing the world over non-profit companies missing the opportunity any day of the week. The risks of inactivity completely outweigh the potential risks of gouging. Gouging and predatory lending already happens (at a 3000% monthly interest rate!). The competition by other microfinance companies, as well as government oversight on lending companies and banks, will keep the interest rates low enough to still be helpful.

And that’s the point — changing the world for good.

If that can be done through for-profit franchising of microfinance, I’m all in.

Now for the good stuff: Resources

As you might know by now, I’m apparently a knowledge broker (also known as an infomediary). That just means I like putting information together for people (and futzing).

So, below you’ll see the podcast (again) which you should listen to along with a PDF I found along the way which describe some of the issues related to starting a microlending organization in the wake of regional conflicts. Then, when you’re completely convinced that you want to start a microfinance company too, join Intellecash as a franchise and you’re on your way to becoming a microlender, changing the world in extremely significant ways.

I guarantee within a few years I will be running my own microfinance company, and it could very well be by starting a microcredit franchise through Intellecash.

(Update: Unfortunately this podcast was lost in the transition to a new blog theme. It may be available by searching Google or Stanford Technology Ventures Program site.)

Financing of Income Generation Activities in the Wake of Conflict (pdf)

Video: What is Microfinance?

Geoff Davis, founder and CEO of Unitus, explains the meaning of microfinance and the huge potential and impact the field.

What is Microfinance?

What is Microfinance?