Grameen America
Program overview
Small loans for low-income women entrepreneurs: Grameen America provides microloans, financial training, and other services to women living in poverty who want to start or expand small business ventures. By providing these services, the program aims to increase participants’ upward economic mobility.
Establishing structured peer networks: Grameen America requires borrowers to form loan groups consisting of five women who know and live near each other but are not immediate family members. These small loan groups then combine with other loan groups to form loan centers of 25-30 women in total.
Incorporating mandatory financial training: All Grameen America participants must attend a five-day training before they receive their first loan. During this training, which is delivered by a Grameen America center manager, participants learn about the terms and conditions of the loan, program eligibility requirements, and general best practices for borrowers. After the training, a branch manager meets with participants individually to assess their knowledge and understanding of the program rules and expectations.
Providing small loans: Each participant in the Grameen American program receives a small initial loan with an average term length of 25 weeks. Grameen America center managers and branch managers determine the amount based on a review of participants’ business plans. Participants are eligible to receive additional loans every six months and may increase their loan amount. Grameen America reports these loan payments to major credit reporting agencies in order to help participants establish credit histories.
Requiring ongoing meetings and peer accountability: After all participants receive their loans, each loan center meets weekly with a Grameen America center manager to make their loan payments. Each borrower receives her own loan and is independently responsible for paying it back, but in order for any one woman to receive another loan, all of the center members must also be up-to-date on their payments. During these weekly meetings, participants also make small deposits into a savings account to encourage building savings habits.
One study with a rigorous design provides some evidence for the Grameen America program as a strategy for reducing material hardship, increasing business ownership and savings, and improving well-being among low-income women.
- A 2022 randomized controlled trial found that three years after entering the program, Grameen America reduced participants’ likelihood of experiencing material hardship by seven percentage points, increased their rate of business ownership by 12 percentage points, increased their non-retirement savings by an average of $839, and improved the likelihood they self-reported being very satisfied with their life by eight percentage points.
Encourage peer-to-peer recruitment: In order to identify women who may be eligible for and interested in the Grameen America program, program administrators should provide materials and incentives for existing participants to recruit individuals in their network. Being recruited from a trusted source may encourage more buy-in from new members, and this form of grassroots recruitment can also facilitate easy formation of loan groups.
Foster a participant-led structure for weekly meetings: Weekly loan center meetings are a valuable opportunity for leadership growth among participants. Each loan center should be encouraged to elect leaders to manage meetings and facilitate communication with Grameen staff. These leaders may also be responsible for tasks such as sending reminders about upcoming meetings and following up with participants who miss a meeting.
Build internal peer networks to provide business advice: The Grameen America program structure does not include personalized business management advice. To bridge this gap, administrators may connect veteran and newer participants to encourage the sharing of advice, expertise, and feedback. These connections may be created through, for example, a one-on-one peer mentoring system, or specific mentorship groups based on participants’ type of business or business model.
Emphasize program retention: As women continue to participate in the Grameen America program, they have the opportunity to receive additional loans. Additionally, longer participation provides more opportunity to establish strong social networks with other members of the loan center. In order to foster this, it may be helpful to remind participants of each upcoming loan opportunity, collect feedback to ensure meetings and other requirements are feasible for participants to fulfill, and provide ongoing coaching for participants on how to grow their businesses.