The Power of Community Banks and Access to Loans

Written by Maddy Lee, Global Brigades Program Associate in Honduras

Imagine trying to buy your first car, pay for college, or purchase daily life necessities without access to loans, a credit card, or a savings account.  Lack of access to affordable loans or savings accounts is often the case in many rural communities across Honduras, Nicaragua, Panama, and Ghana. Global Brigades works to set up community banks so that members have the opportunity to create savings habits and to have access to loans so that they are able to do things such as grow businesses, invest in their children’s education, and save for public health projects. As a volunteer on a Business Brigade, you will have the opportunity to participate in the strengthening of the caja by working with GB staff and Community Bank leaders to foster more financial empowerment. Additionally, you will collaborate with small business owners to provide recommendations for more financially sustainable business practices.

Students from Boston University, Ball State, and Arizona University conduct a business charla in a community in Panama.

Year round, Global Brigades staff works to grow the funds of each caja so that more loans can be given.  Education, by student volunteers and GB microfinance technicians, is a key component of being able to give out more loans in a responsible manner.  By educating caja members and borrowers, Global Brigades has created a culture of few to no defaults. This means that when loans are taken out they are paid back on time and in full, which is an amazing feat for the GB business teams and community members in each country.

One of the microfinance technicians in Honduras poses for a picture with community bank members who are receiving their first capitalization check!

In Nicaragua, a model for public health projects, known as the pre-savings model, was created so that community members would save for their hygiene station or eco-stove for a year before implementation. Honduras has since adopted this model as well so that communities have increased ownership over their projects.  In order for this model to be successful, strong cajas must be in place. Savings accounts must be available and education must be provided on what it means to get a loan, pay back a loan, and save money. To date, Global Brigades has created or strengthened 80 community banks and has invested over $450,000 in communities.  

The community investment fund is set-up to provide matching capital directly to Community Banks, allowing for even greater economic opportunity in each community.  From each Business Brigade $1,500 goes into this fund, but if you want to expand your impact you can give directly to the Community Investment Fund.

Students from MSOE and community members in Cerro Bonito, Honduras after the completion of their business brigade.

Ultimately, by having access to a Community Bank and low interest loans, communities are able to grow businesses and generate more disposable income for themselves and their families.  This disposable income can then be reinvested in healthcare, education, or local businesses. Increased income affects nearly all aspects of a family’s daily life and access to resources. The Business Program plays a key role in our mission to resolve economic disparities and empower communities to rise out of poverty. Join a brigade, donate to the community investment fund, and learn more about the work that Global Brigades does year round!

Global Brigades