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Micro-lender bringing his vision of helping the poor to D.C.

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By Jonathan O'Connell
Monday, April 19, 2010

In 1976, Muhammad Yunus began making loans of a dollar or less to poor farmers and textile makers in his native Bangladesh. Thirty years later, he and the nonprofit micro-lender he founded, Grameen Bank, shared the 2006 Nobel Peace Prize. To date, Grameen has lent more than $9 billion to more than 8 million borrowers, almost all in Bangladesh.

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Now Yunus plans to bring low-interest credit to the poor and unemployed in Washington.

Grameen America, a U.S. offshoot, is already lending in Queens and Brooklyn, N.Y., and Omaha and has lent to more than 2,500 American borrowers. Yunus says that although the United States is one of the wealthiest places in the world, the need for small, low-cost loans is evident in the number of Americans coming to Grameen to borrow money.

"The poverty is kind of hidden because of the welfare," he said in an interview while in Washington last week to raise money and introduce a documentary on Grameen America. "Suppose you withdrew welfare, suddenly Barack Obama decided no more welfare, so the people will come out in the open. They are the poverty."

Similar to a franchise chain executive, Yunus asks that Grameen offices, of which there are more than 2,500 worldwide, follow a specific formula for supporting and guiding borrowers, regardless of the country. Each time Grameen opens a new U.S. office, it flies in a Bangladeshi manager to be part of the founding staff.

Among the results the formula has produced are that most Grameen loans are repaid -- 99 percent in the United States so far -- and that most of the borrowers are women. Ninety-seven percent of borrowers are women, and nearly 100 percent -- all but one or two out of thousands -- in New York are women as well, each using $500 to $3,000 in credit to start hair salons, bakeries, clothing companies and other businesses.

Grameen is looking to open dozens of American locations. Yunus said that "anybody that offers to come with the money, we'll come into that area. We don't distinguish whether it's Washington, D.C., or Omaha, Nebraska, or anywhere else, because it can be done anywhere."

The organization's expansion to Washington has been accelerated by support from local corporate funding. When Yunus introduced a screening of a film about Grameen, "To Catch a Dollar," at Georgetown University's McDonough School of Business, John G. Finneran Jr., general counsel at McLean-based Capital One Financial announced that the company would make a $1 million loan to get the local office started. Venture capital firm Advantage Capital Partners has committed $200,000, putting Yunus more than halfway toward the $2 million he says is needed to start lending here.

Grameen America's chief executive, private equity investor Stephen A. Vogel, is relying on volunteer staff in Washington, but the group has already begun analyzing local poverty numbers and meeting with city officials with the aim to open by the end of the year. The office may be located in one of the District's poorest areas, parts of the region frequently targeted by the sort of high-interest lenders to the poor that Yunus hopes to supplant, as he has in Bangladesh.

"The day check cashers are gone, payday loans are gone, pawn shops are gone, that means the banking system is working," Yunus said.


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