According to senior Brock Seraphin, microfinance is a hot topic these days. Seraphin, a philosophy major at Loyola Marymount University, was awarded a $5,000 Honors Summer Research Grant to implement a microfinance project in California’s Central Valley.
Much of the interest in microfinance can be attributed to the Nobel Peace Prize awarded in 2006 to Muhammad Yunus and Grameen Bank. With their model, microcredit has been established for impoverished individuals in communities around the world. Seraphin utilized this model as the basis for his project.
Over the summer, Seraphin began working closely with the Dolores Huerta Foundation, a community outreach organization with direct ties to potential borrowers in the region. After completing his research, Seraphin began working with a committee to review loan applications. The potential borrowers were predominantly Latino immigrant farmers and small business owners in the Central Valley.
For his project, Seraphin was able to secure $10,000 in loan funds from a credit union. Part of this money was divided into loans of $500 for ten individuals. If each borrower repays the loan of $500, they will be eligible for a loan of $1,000. In the model established by Yunus, loans are given to individuals in lending groups — once each person in the group has repaid his or her loan, the group members may each receive another loan of twice the amount.
“The way I look at it, I took $5,000 [in grant money] and turned it into $10,000 for this project, just like borrowers will be doing with their microloans,” said Seraphin.
Seraphin’s interest in this project stems from “understanding how and why social and economic structures perpetuate poverty.” His job in the LMU Center for Service and Action and the Alternative Breaks program exposed him to opportunities to help others around the world. At the beginning of the summer, Seraphin used some of his grant money to spend two weeks in Cambodia — through the Alternative Breaks program — observing a successful microfinance project.
Seraphin hopes to establish a microfinance trip to the Central Valley as an option for students in the Alternative Breaks program. LMU students are already getting involved in Seraphin’s project. Andrew Healy, professor of economics, teaches a course on microfinance, and he provided Seraphin with five student interns who are assigned a community economics project this semester. Once loans are awarded in December, students from the Latino Business Student Association at LMU will go to Bakersfield to be paired with the borrowers. These students will teach borrowers about saving, finance and other basic business concepts.
Seraphin said he would ideally like to take on a managerial role in this project in the future. He said, “With the support I have received from LMU faculty, staff and students, I believe the project can continue for many years as a way for students to get hands-on experience that teaches them about innovative ways to alleviate domestic poverty.”