document: Tiny Third World businesses commonly repay these `` microloans '' faithfully because they crave the security of a favorable credit rating . This rescues them from the clutches of loan sharks -- microloans typically charge the prevailing local commercial loan rate -- and lets them borrow again in hard times . The money helps them start or expand their businesses -- selling vegetables , sewing , repairing shoes , making furniture and the like -- and boosts their local economies . Their repayment performance shines when compared with that of many sovereign nations . It also looks good compared with a default rate of 17 % by U.S. recipients of federally guaranteed student loans . Though microlending has been around for years , it is now booming . With the decline of communism , U.S. development groups believe they are exporting free-market economics to tiny businesses that can fuel growth in the developing world . `` Micro-enterprise lending is the hottest thing in development since the Green Revolution . Everybody does it , '' says Accion International spokeswoman Gabriela Romanow . The Green Revolution sent farm output surging in many poor nations . Ms. Romanow cites the case of Aaron Aguilar , an unemployed factory worker in Monterrey , Mexico , who borrowed $ 100 to buy clay and glazes for making figurines with his wife in their back yard . In six years , the couple took out and repaid five loans and built their business to 18 full-time employees . Sometimes borrowers have to struggle against setbacks that might seem comical in the prosperous West . One group of women in Cameroon received $ 100 from New York agency Trickle Up to start a rabbit-breeding business , but the rabbit ate her offspring , recalls Mildred Leet , co-founder of the U.S. agency . Undaunted , the women switched to chickens and made enough money selling eggs to branch out into tomatoes and tailoring , ultimately opening two shops , Ms. Leet says . Some Third World commercial banks are taking note of poor entrepreneurs ' repayment rates . Accion persuaded family-owned Multi Credit Bank of Panama City , Panama , to start making microloans two months ago . Isaac Btesh , a director and son of the founder , says the bank has lent $ 80,000 to 100 people so far on 60-day , rotating lines of credit -- with a 100 % repayment rate . `` When we got in touch with Accion , we were incredulous , '' Mr. Btesh says . `` We could n't believe their figures . But everything they said is true . '' Poverty lending has such promise that Multi Credit plans to make it the bank 's number one activity , ahead of trade financing , consumer loans and merchant loans , the official adds . Accion , a Cambridge , Mass.-based nonprofit international development group and a leader in the U.S. microloan movement , says it plans to increase its microlending this year to $ 66.5 million from $ 37.8 million in 1990 and $ 9.8 million five years ago . It says it plans to add 64,000 new clients , up from 40,000 last year and 9,000 five years ago . Its average loan is $ 303 . Accion 's Ms. Romanow says the group , which serves Latin America , plans to expand the lending to a total of between $ 500 million and $ 1 billion over the next five years . The payback rate is 98 % . CARE , New York , perhaps the world 's largest private international-development group , says small economic-activity development -- primarily microlending -- is its fastest-growing portfolio . `` There 's energy and creativity out there , people bootstrapping who are n't waiting for the next handout , '' says Larry Frankel of CARE . Trickle Up , which makes thousands of $ 100 loans annually , says its budget rose to $ 1 million this year from $ 800,000 in 1989 after doubling almost every year throughout the 1980s . Trickle Up makes $ 100 loans in two installments of $ 50 each to small groups of individuals . `` We feel private enterprise is the way to help the poor , '' says Mrs. Leet , who founded Trickle Up with her husband in 1979 . The group started a program in China in 1989 and moved into Laos , Vietnam and Namibia last year . Betsy Campbell , economic-development manager of Westport , Conn.-based Save the Children , says her group underwent a shift in the 1980s `` from being primarily a charitable organization '' to being one oriented towards helping profit-making activities . She says microlending to individuals in 20 nations is rising sharply , with more than $ 3 million in circulation at the moment . Repayment rates in most nations exceed 90 % , she says . `` These people value access to credit so highly that default is n't really a problem , '' she says . Some Third World banks , notably in Asia , have been making microloans for years . Grameen Rural Bank of Bangladesh is considered a pioneer . However , most such banks were set up with state support specifically to target the poor . Not every charity group in the U.S. has joined the microloan bandwagon . The Christian Children 's Fund of Richmond , Va. , sticks to relief efforts and to person-to-person sponsorships , in which a U.S. donor makes regular payments to an impoverished Third World child , for example , while Africare House in Washington , D.C. , focuses on helping cooperatives improve food production and health care . Nor is the booming field of microlending without its detractors -- or its controversies . David Munro , an official with TechnoServe of Norwalk , Conn. , says he prefers to work `` on a larger scale , and I also do n't see -LCB- microlending -RCB- as passing on much in the way of skills . '' And officials at the U.S. Agency for International Development , which finances a big chunk of many private groups ' overseas operations , say they support the principle of expanding poverty lending but oppose congressional efforts to mandate minimum levels . AID has more than doubled its micro-enterprise budget , which includes microlending , training and other activities , to an estimated $ 114 million this year from $ 58 million in 1988 .
extractive_keyphrases: microloans favorable credit rating repayment performance tiny third world businesses poverty lending
abstractive_keyphrases: micro-enterprise lending