Delia came to New York from Ecuador 13 years ago, leaving her children behind in search of a better income to support them. She worked in factories for many years until 2009, when she purchased a large freezer cart, ice cream and supplies. Delia is now happily running her business on a busy New York street corner, and sending more money back home to her children.

Delia would never have been able to afford the cart without a $2,000 loan from microlender Grameen America, an offshoot of Grameen Bank of Bangladesh. Since opening its first U.S. branch in Queens two years ago, Grameen America has helped hundreds of low-income individuals-mostly women-improve their lives by lending them the funds to get small businesses off the ground.

"There is so much demand and need for these types of small loans. Especially in a time when people are losing jobs and they are looking into entrepreneurial pursuits to provide income for their families," says Leslie Kane, the vice president of Grameen America.

Demand is so strong that Grameen America is expanding. The nonprofit, which has lent close to $3 million to more than 1,300 different borrowers in the U.S., added three offices last year-two more in New York and one in Omaha-and intends to open in the Washington, D.C., and San Francisco areas this year. Eventually it hopes to have 50 U.S. offices, Kane says.

Grameen Bank gained worldwide attention when its founder Mohammad Yunus won the Nobel Peace Prize in 2006 for his pioneering work in microfinance. He started what would become Grameen Bank in 1976 by arranging small loans for poor villagers in Bangladesh, and today the bank has 2,562 branches in Bangladesh and has helped set up affiliate organizations, like Grameen America, in a dozen other countries. (Grameen means "rural" or "village" in the Bengla language.)

Kane said that Grameen Bank decided to move into the U.S. on a dare of sorts to Yunus. "As the story that I heard goes, he was challenged after he won the Nobel Peace Prize in 2006," she says. "Someone said, 'It's great it works in the developing world but too bad it would not work in developed countries.'"

Grameen America was certified as a Community Development Financial Institution last summer, so mainstream banks that invest in Grameen can receive Community Reinvestment Act credit. Some banks, including Citibank and Wells Fargo, are also working with Grameen America to set up deposit accounts for borrowers.

Perhaps most importantly to banks, though, such microlenders "are creating the next generation of mainstream bank customers," says Jennifer Tescher, the director of the Center for Financial Services Innovation, a division of ShoreBank Corp. in Chicago. "I think the broader financial services industry is excited by Grameen and the others that are doing the heavy lifting."

Kane says Grameen America will open offices in any city where interested individuals are willing to help raise $2 million, roughly the cost of getting a new branch up and running.

Lukas Lipinski, a former Wall Street banker with a background in microfinance, contacted Grameen America about two years ago with the idea of starting a branch in D.C.

After visiting its Queens branch and working with the staff, Lipinski has now raised $1.1 million, mostly from private-equity firms and commercial banks, and hopes to get the additional $900,000 through a major fundraiser in April.

In the San Francisco Bay area, the capital came a little easier, with Silicon Valley Bank of Santa Clara, Calif., committing a $1 million loan and other small grants and donations. Craig Robinson, the bank's director of community reinvestment, says that Silicon Valley has assisted some international microfinance ventures in the past and was looking to help start one locally. The $11.9 billion-asset Silicon Valley earns CRA credit for making the loan, but its main motivation is encouraging entrepreneurship.

"We see Grameen as an innovative model and want to partner with a leader," Robinson says. "We are lenders to technology and life sciences so when we see something new and in the startup phase, it excites us."

Grameen America differentiates itself from other microlenders such as Accion International and Progreso Financiero by exclusively targeting borrowers living below the federal poverty threshold, which in 2009 was $22,050 annually for a family of four. Accion and Mountain View, Calif.-based Progreso don't have a limit on income for applicants.

Grameen America's average loan size is $1,500, about one-tenth the size of the average Accion loan, and the loans carry a maximum interest rate of 15 percent.

"There is a need all over the country for this level [of credit] and kind of work that Grameen does," says Robert Annibale, the global director of microfinance at Citigroup. "There are so many people that don't have the financial tools or financial education or formal credit."

Education is a key component of Grameen's lending strategy. Individuals seeking loans must first find four other people who also need small loans. Then this group has to meet for five one-hour-training and education sessions held on consecutive days. Only after completing the sessions can the budding entrepreneurs receive their loans, provided Grameen America managers approve.

Still, while the peer requirement is the hallmark of Grameen, Tescher says the tactic could inhibit growth in the U.S., where it's not as familiar. "There is a lot about peer lending to like, but whether it is scalable is the question," she says. "If the only way you can get a loan is to participate in a group, then there are only so many consumers willing or interested in jumping through the hoops."

Kane acknowledges that some borrowers are skeptical at first. However, the loans are not made to the group collectively, but to the individuals, and yet the peer pressure and desire "not to let down your neighbors" really encourages loan repayment, Kane says. The repayment rate is 99 percent and most borrowers have an average credit score of 670 after six months.

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