Nobel Peace Prize winner Muhammad Yunus, known as the "banker to the poor" for making small loans in impoverished countries, is now doing business in the center of capitalism — New York City.
In the past year the first U.S. branch of his Grameen Bank has lent $1.5 million, ranging from a few hundred dollars to a few thousand dollars, to nearly 600 women with small business plans in the city's borough of Queens.
People around the country are struggling to repay mortgages and credit card debts, but Grameen America says its loan repayment rate is more than 99 percent.
"While other banks are collapsing, this one remains strong," Yunus told reporters at a street fair, where about 100 Grameen America borrowers sold wares ranging from food and flowers to clothes and jewelry.
"Microcredit has been one area the crisis has not impacted. The crisis has not touched it, still it is robust as ever," said Yunus, who started Grameen Bank in Bangladesh in 1983.
Zemia Shoffner received a loan of $2,000 in January from Grameen America, which she used to take a baking class to expand her catering expertise and drum up more business.
'Freedom to pursue my passion'
"I have been running my business for about three years now and (the course) meant a lot because it makes me more marketable," Shoffner told Reuters, noting her bad credit meant she could not get a traditional bank loan.
"This has really allowed me to live my dream. I had another job and I wasn't really happy, so now I really have the freedom to pursue my passion. It means everything," she said.
In Bangladesh Grameen Bank has lent nearly $8 billion, in increments of a few dollars to a few thousand, to millions of poor borrowers — almost all women — to run small businesses. Bangladeshi economist Yunus and his Grameen Bank were awarded the Nobel Peace Prize in 2006.
Karen Giral, 20, who is pregnant with her second child and lives in Elmhurst, Queens, has paid off her first loan of $600 and now has a second loan of $1,000. She has used the money to build her business selling Avon products.
"It was a really big help because to save up that much money is ... hard," said Giral, who heard about Grameen America from her mother.
In addition to America, the Grameen Bank operates in Kosovo, Turkey, Zambia, Costa Rica, Guatemala and Indonesia.
Microfinance institutions around the world say they are struggling to raise funds for loans. But Grameen Bank in Bangladesh — where 98 percent of loans are repaid — uses deposits to finance loans.
Grameen America now operates by lending out money gathered through donations and money from payments on existing loans. The bank is applying for a U.S. credit union license to generate the deposits it needs to make more loans.
"Microcredit cannot depend on small donations. This is a business, it should be run like a business," Yunus said.
President Barack Obama recently announced the creation of a $100 million microfinance growth fund for small lenders in the Western Hemisphere to allow them to continue making loans despite the global recession.
"$100 million is a very small amount to start. Grameen Bank in Bangladesh lends more than $100 million a month," said Yunus, adding that it was a welcome "first step."
In Queens, Grameen America borrowers must have two forms of identification and a tax return to show their financial situation. They also must open up a bank account that requires them to deposit $2 a week, on top of repaying their loan, to foster a habit of saving.
Leslie Kane, vice president of finance and strategy for Grameen America, said reducing poverty through microfinance banking is not just for developing economies.
"Many Americans say, 'Oh we don't have poverty in the United States.' But we do, just like every country around the world we need to focus on microcredit," she said.
For Yoly Castillo, 37, a Colombian immigrant who lives in College Point, Queens, a $1,000 loan from Grameen America not only helped her start a clothing business seven months ago but also inspired her to study business administration at college.
"This business has made me open up my horizons, it's amazing," said Castillo, who also works part-time as a medical biller and pays back $22 a week on her loan. "I never expected this of myself ... . It has given me so much strength."