The place where you're born is beyond your control. The majority of people on earth are born in countries where the quality of life is lower than in the wealthy West. One of the main reasons for this lower quality of life is the lack of affordable credit. In other words: access to fair loans. A fair loan is essential for anyone with the ambition to achieve something in life. In the impact world, the lack of credit in emerging countries is referred to as the financing gap. The IFC estimates that this gap amounts to around $8 trillion.
By investing with Lendahand, you contribute to closing this gap. Our investors have collectively provided approximately €200 million in fair loans. This has translated into 1.3 million people gaining the opportunity to realize their ambitions. One of these people is Carmen from Mexico. She weaves colorful baskets, but her sales were limited to her village, preventing her from building a stable income. Thanks to a loan from Lendahand, she was able to expand her market reach, which increased her income. She has now repaid her loan and built a financial buffer. This is the power of impact investing: creating real opportunities for entrepreneurs like Carmen.
How do we ensure that our loans make an impact?
Lendahand does not provide loans directly to local entrepreneurs but to socially driven financial institutions with strong knowledge of the region. The amount loaned to such an institution is then divided into smaller (micro)loans. How do we determine whether a financial institution is socially driven and therefore impactful?We’ve established several clear criteria. For example, we evaluate the interest rates offered to entrepreneurs, the profits of the institution, and the salaries of its management. Our impact committee assesses whether an institution meets these criteria.
The various projects on our website create diverse forms of impact. One project might focus on poverty alleviation through microloans, while another emphasizes sustainability or gender equality.
On our project page, you can easily identify the type of impact a project creates using the impact labels below.
Microfinance
Microfinance provides people without access to traditional banking services the opportunity to invest in their future. These are often entrepreneurs in the informal sector who can achieve a lot with a small amount. We categorize a project as microfinance if the average loan is less than €5,000.
Climate
The loan is used for purposes that have a positive impact on the climate.
Agri-support
The business or financial institution operates in the agricultural sector. For direct loans to businesses, this is easy to identify. For loans to financial institutions, at least 60% of borrowers must be farmers.
Female loans
The financial institution has an active and effective policy to encourage loans for women entrepreneurs. A project receives the female entrepreneurs label if the financial institution allocates more than 60% of its loans to women.
Growth financing
Growth financing supports medium-sized businesses in expanding their operations, for example, by purchasing new machinery, hiring staff, or entering new markets. We categorize a project as growth financing if the average loan exceeds €5,000.
Direct to business
A project receives this label if the loan goes directly to a business, without the involvement of a financial institution. This often reduces borrowing costs for the business but increases the risk for the investor. For this reason, we only offer such projects with additional risk mitigation measures like a guarantee.
Individual loans
Individual loans are used, for instance, by micro-entrepreneurs in the informal sector, for tuition fees, or medical procedures. Lendahand only lends to financial institutions offering individual loans if the loan demonstrably improves quality of life. To assess this, we use a mix of sources, preferably independent external research.
Group loans
A group loan is a shared loan where members of the group act as guarantors for one another. This strengthens social connections and collaboration within communities. The model fosters mutual trust, responsibility, knowledge-sharing, and motivation, promoting financial independence. A project receives this label if the financial institution allocates more than 60% of its loans as group loans.
Invest with impact and confidence
By Lynn Hamerlinck on 5 July 2024
Trees has been investing through Lendahand for years: ‘It does good for the world as well as for my wallet. Social investing is a real win-win for me!’ Find out how her investments are making positive change in emerging markets and read more about her experience with Lendahand.
Read more