At bi-monthly assembly meetings, Adelante clients receive the support they need to succeed in their micro businesses. A fundamental part of Adelante’s microfinance model is providing borrowers with small business education. Since Adelante works primarily in rural areas, it is not surprising that many clients have never completed primary school. Business education ensures borrowers have the knowledge to grow their ventures into profitable micro enterprises, which improves their overall standard of living.
On a recent field trip, I joined a Credit Officer to visit assemblies in and around the town of Olanchito, which is a two hour bus ride east of La Ceiba, Atlantida, in the department of Yoro. Adelante has been offering the women of Olanchito microcredit since 2004 after opening the Tocoa branch office. Olanchito is part of the Aguan Valley, a region where bananas and African palms thrive. The Standard Fruit Company (Dole) has a long history of operations in the area, and some communities are dependent on its banana plantations for employment. Until discovering Adelante, many clients I met in Olanchito had never been given an opportunity to take out a small business loan before.
The assemblies I attended in Olanchito received an educational lesson called Administration 2, which is a sequel to a previous topic dealing with the basics of business management. The Credit Officer started the lesson with five brain storming questions, such as ¨Do you know how much your product costs?¨ and ¨What difficulties do you confront managing your business?¨ After group discussion, several laminated posters followed illustrating the themes that commonly emerge in response to each question.
One theme that resonated strongly with Adelante’s micro entrepreneurs was how to provide credit to customers. In Honduras, it is common for small businesses to offer products on credit since the population is very poor. However, the Credit Officer stressed that customers should pay up front at least the cost incurred to the seller. If the customer fails to pay back the balance on the product, micro entrepreneurs lose their profit, but not their investment. After the lesson was delivered to a new assembly group, a first-time borrower named Irma confirmed, ¨I learned how to manage my business better, like what the Credit Officer said about taking into account the cost of the product before you sell it on credit. I think before I gave too much credit and I lost money that way. I hope to learn more from future lessons¨. Irma invested her first loan for L 3850 or $203 in a cosmetics business, which is a common venture for first-time borrowers but also one that often depends on providing credit to customers.
Small business education is not only valuable to women like Irma who have little experience, but also long-standing clients appreciate the lessons too. Juana took out her first loan from Adelante for L 1000 or $53 over seven years ago in order to invest in a used clothing business. She has since expanded her micro business and now sells a variety of products, such as new clothes, shoes, jewelry, cosmetics and more. Currently, she is expecting her first Individual Loan for L 20,000 or $1053, and she is an enthusiastic proponent of small business education. Before the Credit Officer began the presentation, Juana announced, ¨I ask that everyone who is part of this assembly pay attention because these lessons help us so much with our businesses. Just think, banks don’t give free lessons so we should appreciate the education Adelante gives us to make our businesses more profitable.¨ The women in attendance responded in agreement, and once the lesson started, lively discussion could not be abated.
The last question of the educational lesson, Administration 2, affirms why Adelante has a client retention rate of 95%. The question reads, ¨What do you need to obtain a larger loan and invest more money in your business?¨ An Adelante borrower must make on-time payments, attend assembly meetings regularly, and show that they have invested in their small business in order to obtain a larger loan. These are the only requirements Adelante borrowers must fulfill.