Lom Orng has run modest micro-credit programs with many of its training projects. We are believers in micro-credit, but only when it is tied to something concrete such as vocational training - that is, when the recipient has a resource with which to complement the cash, and multiply it. (Micro-credit handed out widely, on a commercial basis, can be disastrous in our experience.)
Moneylenders in Cambodia charge high interest rates, and most of our graduates do not qualify for bank loans as they lack collateral. So our micro-credit program provides them with capital to start their own businesses - usually by stocking up on parts and stock. Whilst the majority of graduates do not need micro-credit, it allows those who do to get business cashflow moving early on; and gives them an advantage over their competition.
Graduates go through a stringent screening process before they are loaned money, to assess their ability to repay. Typically only four or five of 10 applicants will be successful.
The program assists hundreds of individuals across the country with low-interest business loans. Eighty-three groups (containing over 500 graduates) receive group loans along the lines of the Grameen Bank system in Bangladesh.
Loans are for up to three years, and are often in the $150 to $300 range.
Some loans go to non-disabled people too, to prevent jealousy about 'special' treatment of the disabled, and simply to put more cash into local communities - some of which will end up in our graduates' tills.
The provincial Lom Orng micro-credit schemes were established with the assistance of the Kadoorie Charitable Foundation, Terre des Hommes, the Canadian International Development Agency, and other donors. But after Year One of a micro-credit scheme, repayments generally finance new loans, to other graduates: the scheme soon becomes financially self-sustaining. This removes the need for perpetual donors.
Since 2006, Lom Orng has been advised on the scheme by Angkor Micro-Credit Kumpuchea (AMK), the second-largest micro-finance institution in Cambodia.
Of the 512 loans made between 2000 and 2009, only 33 borrowers were unable to repay 100% of the loan.