Business Model: The MicroLoan Foundation

The organisation provides microfinance to projects in Malawi.

The MicroLoan foundation was set up in 2002 by the businessman Peter Ryan to help very poor people in Malawi.

Last year it made more than 40,000 loans to women in Malawi, with a turnover of about £3m a year and a 99 per cent repayment rate.

"I got involved after seeing some work a friend was doing in microfinance," says Ryan. "We started with £3,000 and a man on a bicycle with a computer, and we now have more than 100 employees. We went for a couple of years with just one branch, and we now have 22."

The development of new branches is funded by donations from the public, but each branch then acts as a sustainable business, he says. Each branch takes about two years to grow into sustainability.

Each branch operates on a similar model. The foundation provides small loans, typically about £60, and then provides support and development training to borrowers, who are typically charged 20 per cent interest over a four-month period.

"That's what's needed to break even," Ryan says. "It would be easy to charge more, to do this as a commercial operation and make a profit. But we've decided that although we need to be sustainable, we'll not produce a surplus and will fund growth with donations.

"We want to make sure it's driven by social and not commercial goals."

He says that the difficulty of microlending is not in setting up a business, but in making it larger while keeping its ethos intact.

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