Small Enterprise Finance MF-small-enterprise

A significant segment of society is not reached with financial services by either the formal banking sector or microfinance programmes targeted for poor households. This ‘missing middle’ can be a critical engine for economic growth and employment if equipped with the right tools.

BRAC developed a separate service that provides loans to entrepreneurs, to help grow micro and small sized businesses that help drive local economies. These tend to be in agriculture and small trade e.g. dairy and poultry farms, fisheries, auto-rickshaw mechanics, beauty parlours, and clothes retailers. BRAC’s impact from this service extends well beyond the number of borrowers, by promoting local employment and market development.

In Bangladesh, the project is called progoti, which means ‘progress’. Progoti clients are additionally supported with access to a range of savings products, options for refinancing and rescheduling. BRAC is also currently testing loyalty schemes and microinsurance products tailored to small entrepreneurs. In addition, clients are able to benefit from market linkages through BRAC’s network of social enterprises

Small enterprise loans are available to both men and women, from all 2,000+ of its branches spread across Bangladesh.

Progoti
Borrowers	342,000
Total savings	USD 59 million
Total outstanding	USD 556 million
Average loan amount	USD 2,200

Microfinance in Bangladesh

The model of microfinance in Bangladesh, as it originated at Grameen Bank, involved tiny loans to women with fixed terms and amounts, group liability, weekly meetings, forced payments into a group savings account, and a set of 16 social pledges chanted each week while standing at attention. The Grameen model spawned imitators around the world, involving a large share of microfinance clients in India, the Philippines and East Africa, among other places.
But while many in the microfinance industry and outside it equate microfinance with the Grameen model, Grameen itself, as well as the other microfinance institutions in Bangladesh, have quietly re-engineered their models to pursue an expanded vision. The most dramatic shift occurred in 2002, with the introduction of Grameen II, a thorough re-tooling of Grameen Bank's operations. Throughout the past decade, most of the hundreds of microfinance institutions (MFIs) in Bangladesh have followed suit, experimenting with new lending methodologies, products and support services.
Loans to women? Many MFIs now serve men, too, though loans to women still dominate.
Forced group savings? Most MFIs now offer flexible, individual deposit services to their members. MFIs have become largely self-funded from deposits. (The sector has $2.6 billion in total loans, financed by $2.2 billion in total savings, a a microfinance data aggregator.) And unlike the original forced savings, savers can deposit and withdraw their money whenever they wish.
Pre-set loan amounts and terms? Borrowers can often select the length of loan they need, and loans are now available for small businesses (up to about $15,000). At the same time, many MFIs have developed loan and support programs for the "ultra poor."