Adelante targets extremely poor women in rural areas in a very poor country. In effect, our initial loan amount (which can be as low as $50) is usually more money than a poor Honduran woman has ever held at one time. Adelante is proud of the fact that it offers non-collateralized loans, meaning that clients are not required to own a home or have an operational business when they apply for their first microloan. The only requirement is that a woman be accepted by her peers to form a solidarity group to take out the loan.
A group of four to six women, called a solidarity group, will jointly take out a loan. While each woman receives a pre-arranged portion of the loan to invest in her own micro business, it is the group that is jointly responsible for repaying the loan. That means if a client cannot meet her repayment obligation, the others must cover for her. We explain this obligation many times before the group receives its first loan and stress the importance that group members pick each other very carefully. Since the women trust each other’s character, it is known as character-based lending as opposed to traditional banks, which use collateral-based lending.
In most villages there are several solidarity groups. Two to eight groups come together to form an assembly, and groups have assembly meetings every two weeks. Adelante assemblies are led by borrowers who fill the role of Assembly President, Vice-President, and Treasurer. A collection of assemblies forms a zone, which is assigned to an Adelante Credit Officer, who also attends assembly meetings. The purpose of assembly meetings is for clients to receive the moral and technical support to succeed in their micro enterprises. At each meeting they receive educational lessons on a business topic, report on their bi-monthly payments, and enjoy the companionship of their fellow borrowers. Credit Officers have many responsibilities, including credit evaluations, payment recovery, disbursements, loan refinancing, marketing, and all other tasks related to managing their loan portfolio.
When providing microcredit to the extreme poor in rural areas, credit alone is not enough. Our borrowers need business training to ensure that they are as informed as possible as to how to grow their small businesses and increase profits. Clients receive interactive training presentations from Adelante Credit Officers at bi-monthly assembly meetings. The presentations are illustrated on laminated poster board so that each of our clients, including those who are illiterate, can follow along. Our Business Development Education Department is located at Adelante’s head office in La Ceiba, Atlántida, and oversees the execution of the Education Program.