United Prosperity (organisation)
Encyclopedia
United Prosperity is a not-for-profit
Web-based microcredit
organisation.
Unlike most microcredit
or person-to-person lending
organisations, United Prosperity does not directly lend to the micro-entrepreneur, but instead the micro-loans are used to provide a guarantee to a local bank
, which lends to the micro-entrepreneur. Typically the local bank will lend about twice the amount provided by the micro-lender's guarantee, thus providing greater leverage
than traditional micro-credit.
Another claimed benefit of this approach is that the micro-entrepreneur develops a relationship and, most importantly, a credit history
with their local bank, enabling the micro-entrepreneur to become independent of the micro-lenders in the long term. A criticism of traditional microcredit
models is that they can create a long-term dependency
between the micro-lenders and the micro-entrepreneur as the micro-entrepreneur never builds a relationship with local banks.
Non-profit organization
Nonprofit organization is neither a legal nor technical definition but generally refers to an organization that uses surplus revenues to achieve its goals, rather than distributing them as profit or dividends...
Web-based microcredit
Microcredit
Microcredit is the extension of very small loans to those in poverty designed to spur entrepreneurship. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit...
organisation.
Unlike most microcredit
Microcredit
Microcredit is the extension of very small loans to those in poverty designed to spur entrepreneurship. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit...
or person-to-person lending
Person-to-person lending
Person-to-person lending is a certain breed of financial transaction which occurs directly between individuals or "peers" without the intermediation of...
organisations, United Prosperity does not directly lend to the micro-entrepreneur, but instead the micro-loans are used to provide a guarantee to a local bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
, which lends to the micro-entrepreneur. Typically the local bank will lend about twice the amount provided by the micro-lender's guarantee, thus providing greater leverage
Leverage (finance)
In finance, leverage is a general term for any technique to multiply gains and losses. Common ways to attain leverage are borrowing money, buying fixed assets and using derivatives. Important examples are:* A public corporation may leverage its equity by borrowing money...
than traditional micro-credit.
Another claimed benefit of this approach is that the micro-entrepreneur develops a relationship and, most importantly, a credit history
Credit history
Credit history or credit report is, in many countries, a record of an individual's or company's past borrowing and repaying, including information about late payments and bankruptcy...
with their local bank, enabling the micro-entrepreneur to become independent of the micro-lenders in the long term. A criticism of traditional microcredit
Microcredit
Microcredit is the extension of very small loans to those in poverty designed to spur entrepreneurship. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit...
models is that they can create a long-term dependency
Dependant
This article is related to law. For the personality trait, see Dependent Personality DisorderA dependant or dependent is a person who relies on another as a primary source of income...
between the micro-lenders and the micro-entrepreneur as the micro-entrepreneur never builds a relationship with local banks.