The Chalco Valley and the state of Chiapas, the poorest state in Mexico, are home to vast numbers of poor people with no fixed employment. Most scrape out a living through an informal family business or, in Chiapas, through seasonal farming. Business credit could enable the poor to start or expand their own very small businesses, but the only source of capital is from money lenders who charge exorbitant interest rates. Conventional banking sources are not interested in servicing very small loans, leaving the poor entrepreneur with no opportunity to put his or her dreams to work.

There is a tremendous need for increasing loan capital availability in order to expand outreach initiatives to offer access to business training, micro-lending and savings to more poor families in Chiapas, Mexico.

AMEXTRA offers basic training, the opportunity to save, and very small loans to qualified poor borrowers. The lending methodology is based on “solidarity groups.” Those interested in participating must form a group of at least 5 people who agree to meet once a week, approve each other’s business proposals, and mutually guarantee the loans of fellow members. The weekly meeting is also a time to deposit savings, make loan payments, give advice, and encourage each other. When loans are repaid, the principal is lent again to another needy micro-entrepreneur, multiplying the effectiveness of each dollar invested. Borrowers who repay their loans are eligible for follow-on loans that increase in amount and term as their businesses expand. To develop financial discipline and to prepare themselves for financial emergencies, every participant saves at least $1 a week in interest-bearing accounts. Participants’ savings are available for withdrawal at any time throughout the year. Their savings provide greater financial security for their businesses and their families, thus laying a good foundation for future needs. The program has remained operationally self-sufficient over the past several years, a testament both to the credit-worthiness of our loan recipients and the hard work of the local staff.