Micro-loans Come to Leelanau County

Rural Northern Michigan

The Utopia Foundation 2009 Initiative will begin a pilot micro-loan program in Leelanau County, Michigan implementing a Group Lending and Educational model, with the intentional impact of:
-encouraging micro-enterprise
-providing education
-increasing local financial independence
-reducing emigration from the area
-promoting local agriculture, and agro-products
The target average micro-loan will be approximately $1,000.00 per project; with a goal of piloting 5 separate projects within one Borrowing Group.

The Need
The State of Michigan’s economy is currently facing huge challenges, with two of its top three industries (tourism and manufacturing) in decline. Of the top three industries in Michigan, agriculture is the only sector growing.  Agri-goods is a $71 billion economic engine, and at this time is actually adding jobs.  Michigan residents are leaving the state in a staggering exodus–109,000 more people emigrated than immigrated the state in 2008, and this is a growing trend.  
Micro-loans have shown to be an effective way to improve the living standards of the population where they live.
The Utopia Foundation is taking a proactive approach to assisting and encouraging the young farming community to remain in this geographic area.  The prototype lending method being implemented, parallels the model used in the rural Guatemala highlands to encourage families to remain in their own rural areas; rather than move to the city where they would likely be exploited, become dependent on the resources of the urban city garbage dump, continue living in extreme poverty, and then become homeless.

Project Description
Today, the Utopia Foundation funds several micro-lending Borrowing Groups in rural western Guatemala.  These micro-loans are unique, using an integrated  Group Borrowing model of micro-loans and education.   The Guatemala model provides loans for business ventures as diverse as mini-convenience stores, handicrafts, food production, growing vegetable and flowers and weaving. The Borrowing Group of individuals develop business plans together, approve new loan recipients, and co-guarantee individual member’s loans.  The average loan ranges from $90-$250.00.
Modeled after the existing Borrowing Group model of micro-loans in Guatemala, the Utopia Foundation will establish a program for small agri-goods based projects in Leelanau County.
While many micro-loan programs have been successful and become sustainable in developing countries, none have been established in the Michigan region and few domestically.  Additionally, this program, as in the Guatemala model, proposes the following unique characteristics:
-Micro-lending in a rural area
-Group Borrowing
-Collective repayment responsibility
-Group members approve new loans for specific projects
-Group Educational components
The group members quickly become self-reliant, as they name their group, elect group officers, approve new group members, learn the development of business plans, self regulate attendance and participation in-group meetings.
This previously disadvantaged segment of the society begin to build social capital within their community, which ultimately serves as a supportive network.  This micro-loan program provides the opportunity for people to develop their own solutions to financial hardship and to determine their own path to success.  Individuals involved in these programs are more likely to gain voice in the decisions of their own communities.  As these micro-entrepreneurs develop successful businesses, they also grow in capacity and provide jobs to others in their community.

Goals and Objectives
The Utopia Foundation’s intention is to provide opportunity through micro-loans in a group-lending environment, accompanied with relevant education, to residents in Leelanau County for agro-goods based business ventures.   The first loan cycle is targeted to include 5-7 recipients at an average of $1,000 per loan.   The Borrowing Group will determine, along with consultancy from the advisory board, the composition of the group, the designated projects, educational topics, and the appropriate timeline regarding repayment of loans.

Target Population
The initial focus will be small farmers or other micro venture interests in Leelanau County that may not qualify for traditional loans, or who have creative, and innovative ideas, and are in need of development funds.

Project Activities
Establishment of a Borrowing Group with educational components including entrepreneurship and agriculture will serve as the focal points of this project.

Milestones include:
•    Advisory Board Established
-Begin focus group to determine interest
•    Loan Application and Evaluation Criteria Developed
•    Educational Program Developed
•    Call for Loan Applications
•    Initial Loan Evaluation by Advisory Group, later by Borrowing Group
•    Loans Awarded
•    Monthly Loan Circle/Repayment meetings begin
•    As loans are repaid, new applications are evaluated and new loans awarded – this establishes the revolving loan process that will allow expansion to several borrowing groups
•    On-going Education: Ideally, the Utopia Foundation will partner with the Michigan Land Use Institute, and Michigan State University Extension offering agricultural education,  as well as focused classes on budgeting and entrepreneurship.

Staffing/Administration
A volunteer Advisory Board will be established with local experts in agriculture and agro-goods.   The Utopia Foundation is seeking financial and consulting partnerships with established agricultural focused groups such as the Michigan Land Use Institute,  MSU Extension and Horticulture Station, as well as established small scale farmers and potential outlets of the agro-goods developed through the program.

Target Partners
•    Michigan Land Use Institute—Offers frequent agricultural education as well as coordination of potential retail/wholesale outlets for projects products
•    MSU Extension—Serves as key coordinator in the region of education and funding.  We will solicit participation from an advisory perspective as well as opportunities for low or no-cost education for participants
•    MSU Horticulture Station—May be able to offer some facilitation of supplemental grants for projects with research potential as well as an advisory resource
•    Leelanau Conservancy—Currently offering local land conservation, new FarmAbility program and land transfer planning education

Evaluation
At the most basic level, the Utopia Foundation evaluation criteria is the successful repayment of the micro-loans including interest, within the established timeline. Additionally, we will evaluate the sustainability of the established projects. Further sophisticated, evaluation will include developing a method to measure the social impact of the micro-loans in Leelanau County to include the individual entrepreneur, the Borrowing Group, the enterprise and the local community.

Project Budget
Sources of Funding—The Utopia Foundation is seeking private donations and investigating various grants to fund the micro-loans.

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