Zero Interest Microloans

The microfinance industry is broken and plagued with usury. The crushing burden of high interest debt is well documented, unsustainable, and cruel.

More than a billion micro and small enterprises (MSEs) can't access and leverage affordable capital; something big business to everyday to meet market demands and thrive.

The average annual interest rate that MSEs pay for microloans around the world is 30% to 50% in interest per year. Triple and even quadruple digits rates are common.

That means a small business borrowing at 30% to 50% must manage to earn a net profit margin of at least a 30% to 50% to avoid ending up poorer as a result of accepting a loan.

Yet according to data from the World Bank, the average net profit margin for micro and small businesses (MSEs) in developing countries is around 5-6%.

Our solution is simple - we lend money to entrepreneurs to enable them to leverage capital to grow their businesses. We lend money like any lender does, but we choose to not charge interest.

The technology that enables our solution is available to anyone:

1) Money transfer services with Stripe, PayPal, Wise, and bank wires.

2) An online application 

3) An underwriting and portfolio management system - Google Sheets  

Our solution serves more than micro and small businesses (MSEs) in low income communities, a market with more than a billion entrepreneurs.

MSEs are the backbone of local communities everywhere and employ 50% to 90% of the global workforce (depending on your yardstick). They are underserved because the entire microfinance industry is too expensive and unaffordable. Because interest rates charged by lenders significantly exceed the SME's net profit margins, borrowers become poorer as a result of borrowing. 

Our solution gives SMEs access to affordable capital so they can grow their businesses, prosper, and support their families and communities.

We serve low income communities with affordable capital. There are many reasons for my personal proximity to our communities. 

First, my personal social and economic background as a founder. My parents grew up poor, my mother is from Honduras, I speak Spanish, and I years of experience living as an expat in low income countries including my current residency in Thailand.

Second, I'm career banker with deep financial expertise and experience.

Third, we have hands on experience. We're in our 3rd year of operations. We've learned from the community we serve. We've made mistakes, corrections, and improvements. Because our community is global and diverse, we will always be learning in order to deliver our solution effectively.

More than 1000.

We would like institutional partners that can help us expand our community outreach with MSEs in low income communities around the world. There's more than a billion people who desperately need our services, but we have difficulties finding and connecting with them.

Also, our solution is ready to scale, but we don't have the budget or staff to grow beyond our current limited capacity.

Our solution is innovative because because microfinance lenders charge high interest rates and we do not.

The microfinance industry is broken and plagued with usury. The crushing burden of high interest debt is well documented, unsustainable, and cruel. This problem which is a boom for lenders and a debt trap for borrowers is decades in the making. 

We believe our zero interest loans not only give equity to small businesses, but may catalyze a broad movement to finally recognize that microfinance is failing the poor everywhere. 

We don't expect other lenders to lend at zero, but we hope that our work will inspire large lenders to consider what is affordable for vulnerable consumers.

When finance is affordable, it gives borrowers leverage to grow, do things they can't do themselves, and prosper. If done practiced thoughtfully without greed, microfinance can lift hundreds of millions out of poverty. 

We have the following impact goals with each entrepreneurs we serve:

1) Increase our community outreach and dismantle poverty

2) Dismantle debt traps

3) Reform the microfinance industry.

4) Increase financial literacy

We plan to meet our goals by consistently working hard and asking others like MIT Solve to help us in our journey.

Sustainable or affordable microfinance finance related to 17 UN SDGs. The goals we are aligned with most directly are:

1. No poverty 

8. Decent Work and Economic Growth 

9. Industry, Innovation, and Infrastructure 

10. Reduced Inequalities

Indicators we use to measure progress include the # of zero interest micro loans we make, # of micro and small business we help, # of female entrepreneurs and other underserved segments of society including the elderly we help, # of low, lower middle, and middle income communities we serve.

Sunday's theory of change:

1. Problem: Lack of access to affordable financing is a major barrier to the growth and success of micro and small businesses in low-income communities.

2. Outcome: Increased financial stability and growth of micro and small businesses in low-income communities.

3. Interventions: Providing zero-interest microloans to eligible businesses in low-income communities, along with financial literacy training and support to help them manage their finances effectively.

4. Pathway: By providing access to affordable financing, micro and small businesses in low-income communities will be able to invest in their businesses, create jobs, and generate income. This increased financial stability will lead to greater economic growth and prosperity in these communities, contributing to a reduction in poverty and inequality.

5. Impact: Over time, Sunday's theory of change predicts that the increased financial stability and growth of micro and small businesses in low-income communities will have a cascading effect, leading to improved quality of life, reduced poverty, and greater economic opportunity

The microfinance industry today is synonymous with usury and high interest loans. The damage of this broken industry are obvious and cruel.

Zero-interest microfinance is relatively uncommon and has not yet gained widespread adoption in the microfinance industry as a way to maximize the impact of lending programs and reduce the financial burden on borrowers. However, zero-interest microfinance may grow and change the current state of the industry as more organizations recognize the value of this approach, and as funding and support become more widely available.

There are large organizations leading the fintech revolution like Stripe, Apple, Google, Mastercard, and Visa. Like most banks and lenders, we ride on the shoulders of big tech leaders. 

For example, with Stripe we can send and receive money to and from borrowers around the world at a fraction of the cost of traditional solutions like bank wires and Western Union. Stripe also handles currency exchange efficiently and has started to adapt blockchain too. Everything that Stripe can and will do, we can do.

Thanks to Google Drive, our underwriting and portfolio management system is cloud based, accessible by teams around the globe, and practically free. Not having physical files is efficient, environmentally friendly, and safer for consumer privacy.

We use social media to confirm borrower identification, character, and minimize fraud and ghosting because we're an online lender who lends to strangers we've never met in person.

As Apple and Android evolve with so will they way we authenticate the identities of our borrowers and probably the way we transfer funds.

In the near term future, ChatGDP and AI will do some of the manual work we do now which will enable us minimize our costs and continually scale our impact with zero interest microloans.

Our solutions team includes myself and four board members. Two of our board members are female including an Asian American. I, myself, am Hispanic American. We are expanding our board and have a goal of achieving gender parity.

We also work with and welcome volunteers from diverse communities around the world including Africa, Latin America, and Asia.

The beneficiaries of our work are globally diverse and the nature of work directly promotes diversity, equity, and inclusivity.