The Peter J. Tobin College of Business recently introduced
a novel, student-run Global Micro-Loan Program (MGT 4310) that
actively engages students in international finance while fulfilling
St. John’s Catholic and Vincentian mission of helping the poor and
the marginalized.
Dr. Linda Sama, is spearheading the initiative, which is scheduled
to debut this Spring (2009) with the introduction of a
three-credit elective called Entrepreneurship.
Micro Finance — lending small amounts of money
to businesspeople who do not have the necessary collateral required
by traditional financial institutions — has been increasingly
embraced by entrepreneurs in marginalized geographic areas, in
particular, by women entrepreneurs. Loan candidates are carefully
vetted and repayment trends vary from six months to a year, with
typically low default rates tending to be low running at 3-4
percent.
Entrepreneurship
Elective
Starting this spring and every semester thereafter, qualified
juniors and seniors in the Tobin College are invited to apply for
admission to the Entrepreneurship elective, enabling them to
participate in the Global Micro-Loan Program. As part of this
initiative they will be involved in the process of helping to
provide business loans to small entrepreneurs in distressed
countries.
Relying heavily on the Web, the course deftly combines St.
John’s award winning IT capabilities with student talents in
marketing and financial assessment. The Daughters of Charity, as
Program Field Partners, supply the necessary distribution and
collection of funds worldwide.
Division of
Labor
The Program blueprint centers on a division of labor between
participating students and Daughters of Charity and is designed to
achieve effectiveness and minimize administrative and start-up
fees.
With an established presence in 72 developing countries and
familiarity with their local communities, the Daughters of Charity
approve initial applications. They then communicate with and
distribute funds to approved candidates and subsequently collect
loan repayments. Since the Program is Web-based, donors can submit
funds to fulfill loan requests in denominations of $50 to $1,000
from anywhere in the world where there is Internet access.
Donated monies are routed to a special St. John’s restricted
fund to be wired to vetted applicants. “As monies are repaid they
flow back into this fund generating a growing source of capital for
larger numbers of candidates,” Dr. Sama explains. The loans are
provided effectively interest free thus eliminating many of the
concerns rising from high interest rates attached to such
loans.
Program students assist IT in designing and maintaining the
Program Website including providing links for donor contributions.
They monitor loan repayment and fees, develop marketing strategies
and assist in lending risk and business plans. “As the Program
gains momentum,” Dr. Sama notes, “ the students will assume more
activist roles such as providing outreach to potential donors and
helping to identify lending candidates. An anticipated Student
Fellows Program will permit students to meet with entrepreneurs who
are recipients of the Program’s loans to be assessed first-hand to
measure the Program’s effectiveness."