Nonprofit harnessing microloans to help Cambodian women


Five years ago, Encinitas resident Niels Lund traveled to Cambodia for an art exchange program. Upon meeting local mothers, he had a new goal: to harness the power of microloans.

A retired teacher, Lund is also the founder and executive director of Microloans for Mothers. The nonprofit issues small loans to Cambodian women, allowing them to start and sustain businesses.

“Poverty is the norm there — it’s totally different from our area,” Lund said. “But these women have been able to make their businesses succeed with ingenuity and a little help from us.”

How it works: Five women form a group and apply. If approved, each group member is given a $100 loan. At the end of six months, the money is repaid, plus 10 percent interest.

After that, the women can request larger loans, giving them the opportunity to grow their businesses.

Instead of collateral, group members co-guarantee each other’s loans. If one woman misses a payment, the others pitch in to cover the cost.

“The group develops a tight-knit bond, and so every woman has an incentive to make sure her business succeeds,” Lund said. “They don’t want to disappoint the group.”

Of the 138 microloans the nonprofit has issued, 98 percent have been paid back in full.

“We’re teaching these women to be independent,” Lund said. “It’s the old adage of ‘Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.’”

Businesses run the gamut, from vegetable farms to fish markets to even a karaoke store. And some are very successful. Chhoun Sophal, one woman in the program, averaged $133 a month in profit in 2011 from running a pushcart business offering food and drinks.

In the U.S., a $100 loan won’t come close to paying for business start-up costs. However, it’s quite a bit of money in Cambodia.

“It’s essentially two months’ salary,” Lund said. “You can really do something with the funds.”

He added that the business culture is completely different there. For instance, permits aren’t required for new ventures.

“If you can make a go of it, that’s all that’s necessary,” he said.

Microloans for Mothers has its roots in Class-ACT, a nonprofit Lund set up to bolster art in elementary schools. In 2009, Lund and other Class-ACT representatives went to Cambodia as part of an international art exchange.

After touring a school, they met the Cambodian children’s mothers and were struck by how many of the families were struggling.

“Most of them are single moms — it’s very typical,” Lund said. “We knew we should do something to help.”

A year later, Lund established Microloans for Mothers. It’s modeled on the Grameen Bank, which pioneered group-based, collateral-free loans. The system has lifted many out of poverty in Bangladesh.

Besides microloans, the nonprofit offers business training.

Another important aspect, Lund said, is that the women contribute to a personal savings account as they repay their loans. Most people live week to week there, he said, so it’s important they understand the value of saving money.

Microloans for Mothers serves rural areas in Cambodia. Lund said he’d like the program to branch into bustling Phnom Penh, the capital city.

Also, the nonprofit established a business training program for mothers in San Diego County, though Cambodia remains the focus.

To combat disease, the nonprofit expanded its mission to build latrines, because rural areas lack them. So far, it has built 17.

“When you go into a country, you find new needs,” Lund said.

He said Cambodia is especially in need of help, given its recent history. Civil war engulfed the country from 1970 to 1975. Afterward, the Pol Pot regime massacred a large number of people over four years, in mass grave sites known as the “Killing Fields.”

“The country is still recovering,” Lund said. “Here we are — in a very small way helping the process.”

For Lund, follow-up visits to Cambodia are rewarding. He sees firsthand the progress the women are making.

“It’s amazing the success we’ve had,” he said. “It’s changed lives considerably.”

Microloans for Mothers is supported by various groups and private donations. To donate or learn more, visit