On April 12 2016, a club at Hamilton College, a private liberal arts college in Clinton, New York, hosted a bake sale that raised $836 at the 20th Sacerdote Great Names Lecture featuring astrophysicist, Neil deGrasse Tyson. That club, the Hamilton Microfinance Club, is not only a club but it is a learning experience for members and enhances the local community.
Hamilton Microfinance club is a real-world example of innovative microfinance institutions. It issues micro loans up to $5,000 dollars to local entrepreneurs to stimulate business activity. By making loans rather than grants, Microfinance helps the entrepreneur build a credit history. HMF earns the money for the loans they award through fundraisers. In the fall, there is the Great Pumpkin Challenge fundraiser. Students guess the weight of a pumpkin for a dollar per guess. February brings a Valentine’s date auction.
Once HMF gathers its funds for the loan, the club puts the money in a savings account that it uses as collateral for the loan. Club members read through business plans, meet with loan candidates and work together to choose which projects to fund. Reviewing loan applications is the most educational and interesting part of the club activities for many members. The loans are granted by Access Federal Credit Union. Thomas Owens, the president and CEO of the credit union, serves as a mentor to guide the students through the process. According to Owens, the fact that it is the club’s own funds at work and at risk if the loan goes into default is why the process is so practical.
In the last several years, HMF has given several loans to local small business owners, including a local Amish farmer, and has raised several thousand dollars through on-campus fundraisers. The Hamilton Microfinance Club is a shining example of what microfinance can do for both the guarantor and the recipient of a microfinance loan.
Photo credit: Lend of America