Small Loans, Significant Impact

That bond helps people make payments, said Chattree. If one woman is having trouble repaying a loan because, say, her husband is sick and she has to care for him and the children, another of her group might pitch in to help with child care. Loan disbursements for the whole group are slowed if one person defaults, she said.

After the meeting, as several women drift off into the kitchen with a calculator to discuss their plans, 10 new prospective borrowers stop by the apartment.

The program began in 1974, when Yunus lent $27 to a group of poor villagers and realized that even small amounts could make transformative differences. He set up the Grameen Bank, which has since disbursed about $6 billion in tiny loans to about 7.4 million Bangladeshi micro-entrepreneurs, mostly women in businesses such as street vending and farming.

In Bangladesh, Grameen also functions as a savings bank, makes college and housing loans, and operates projects in areas such as telecommunications, yogurt production and solar energy.

The problem with capitalism, Yunus says, is its distinction between companies pursuing profit and charities pursuing good. His bank model operates with corporate efficiency, but pumps profits back into social objectives.

The borrowers in Queens are following Grameen's self-sufficient model in the developing world.

But Yunus acknowledges that the United States is different from the seven countries where Grameen operates its loan programs, or the dozens of others where Grameen has offered technical advice.

Here, there is more regulation, so a person cannot just set up a cart and sell cakes without a permit.

The welfare system discourages income-generating activities, Yunus says. "If you earn a dollar, that dollar is to be deducted from your welfare check. If you want to quit welfare, then you lose your health benefits," he told the Financial Times.

Rules for setting up a bank are cumbersome for a micro-operation, and Yunus has met with the head of the Federal Reserve and members of Congress to discuss creating more flexible legal frameworks.

Grameen America will break even when it has 20,000 borrowers, Chattree said, a scale she expects to achieve in three to five years.

That is something that no American micro-lender has achieved, said Michael Chu, a specialist in micro-finance at Harvard. "In general, the feeling is that micro-finance doesn't work in the States," said Chattree, even though many groups, including some aided by the Grameen Trust, have followed the Grameen model.

Other micro-lenders and academics say that if anyone can spark discussion on the issue, Grameen can.