New loan system for business hopefuls

A NEW lending system designed to help aspiring entrepreneurs in lowincome communities will be introduced to Scotland at the start of next year.

The Grameen Scotland Foundation will identify business hopefuls “locked out” of the financial system who would benefit from loans charged at competitive rates of interest.

Borrowers are not required to provide collateral up front and are asked instead to showevidence of a saving pattern.

The pilot scheme will serve Glasgow, North Ayrshire, West Dunbartonshire and Inverclyde, four of the five most deprived communities in Scotland.

Tesco Bank will provide £500,000 for Grameen’s first venture in Europe. The model currently operates in 38 other countries.

The foundation has also attracted £100,000 from the Scottish Government and the same donation by Stagecoach founder and philanthropist Ann Gloag.

The Grameen system of lending was devised in Bangladesh in the 1980s by Nobel Laureate Professor MuhammadYunus, thenew chancellor of GlasgowCaledonian University.

Hesaid:“Wemustencourage people to envision their own futures and once that is done find out how to get there – once a person has a vision, it can be made real.”

The Grameen method sprung from an experiment when ProfessorYunus, then a lecturer, gave 27USdollars to 42 workers who were in debt to loan sharks.

The loans saved theworkers from punitive interest repayments, which in turn allowed them to support their families. The borrowers repaid the loans in full.

Mr Yunus and the Grameen Bank won the Nobel Peace Prize in 2006 for anti-povertywork.