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Raising Money to Fund Loans for Small Businesses in Third World Countries

Tuesday 10th of April 2007 07:26:49 PM

Instead of raising money for charity through T-Shirts sales and giving it to a charitable organisation, two students from the University of Texas, USA, have decided to use the money to fund individual micro loans that are given to those in third-world countries so they can build small businesses. The idea is to give them the seed money needed to make business ownership possible. After receiving the money, the loans are paid back a little at a time.

Economics and mathematics student Tariq Ali, and Basel Murad, a finance and business student, who met while attending a business internship last summer, decided to find a way to promote small business and have more control over how and where their money was spent by granting small loans instead of giving money to a larger charity. So far, their strategy is working. “I wanted to do something non-profit. But when you look at a lot of non-profit organizations, it's just like: 'Donate money to us.' It's really broad, because you give them money and hope it goes somewhere. I wanted to do something where I could see where my money is actually going,” said Ali.

By selling T-Shirts, the friends hope to raise enough money to grant eight small loans. “I think it's easier to help people on a micro level than macro level. We're able to help these individual people, and these ripple effects will happen. Sometimes, groups like the World Bank will try to do a big project like build a bridge, and it just might not happen, and there's a whole lot of bureaucracy involved. So our whole model is to get away from the bureaucracy and go directly to the person, give them the money and let things take shape on their own,” said Ali. The two have already helped two women start their own businesses through micro loans, which the women are currently paying back.

(c)Scott Snyder, www.sxc.hu