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Keeping Families Together: Guatemalan Credit Unions Launch Young Entrepreneurs Fund

Guatemala has one of the highest numbers of small business startups in Central America. Yet only one in seven startups survive the first year of operation. Young entrepreneurs are high risk credit subjects and therefore credit unions have been reluctant to finance them.

Many young people feel defeated, leave their communities and travel north looking for work. Guatemala credit unions have asked Worldwide Foundation to help them find ways to finance small businesses to provide jobs in their communities.

The Worldwide Foundation made a $15,000 grant this month to Guatemala’s FENACOAC/MICOOPE system to serve as seed money to develop best practices for young entrepreneur lending. The seeds germinated almost immediately, as that fund has now grown to $100,000 with matching member (FENACOAC) funds and Guatemalan credit union contributions.

At the end of 2017, Worldwide Foundation enlisted a number of credit union CEOs who do commercial lending to do a strategic workshop with the Guatemala credit unions on how to do small and medium enterprise lending (SME) to provide employment for young people in the rural communities. That led to the Guatemala credit union system national strategic plan which now prioritizes the development and expansion of credit union small and medium enterprise lending.  It supported both the expansion of lending underwriting and products and the expansion of delivery via digital channels.  It also led to the creation of a commercial lending CUSO to address the legal constraint that Credit unions are not able to lend to legal entities and to attract expertise.  World Council currently provides technical support to the credit unions to do so.

Inspired by Wisconsin, Illinois and Ohio credit union donations, Worldwide Foundation made a grant of US$15,000 to the Guatemala national credit union association to serve as seed money for credit unions to use for developing best practices in lending to young entrepreneurs.   The association matched that grant with US$15,000 and called for contributions from credit unions to take this to the national level.  The credit unions committed another $70,000 to start a Young Entrepreneur’s Financing fund for credit unions to use in helping incentivize credit unions to finance young entrepreneurs.

Geopolitical issues often have community origins. Credit Unions are community driven organizations driven by their members to find solutions to those societal stresses at the community level before they build to the geopolitical level.  Global credit unions contribute technically and financially to work with our Guatemala colleagues to address the need for local opportunities that affect their communities and affect our communities.  Our sincere thanks to all who contribute and step up to do so.

Safe travels

B-

Brian Branch
President & Chief Executive Officer
World Council of Credit Unions