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Jennifer Marie Lopez was supposed to intern for fashion giant Betsey Johnson, but life got in her way. Lopez scored the internship offer at a tech school that folded ahead of her first day.

“She’s my idol to create with because she does happy patterns and is really expressive,” Lopez, 35, said from her New Haven apartment.

This touch with a long-held dream exemplifies the kind of missed opportunities Lopez has seen time and time again. She attempted to enroll at the Fashion Institute of Technology in Manhattan after her tech school stint, but high costs and personal responsibilities drove her away. Fashion design eventually became a deferred dream; Lopez focused on earning money as a nurse and security guard, taking care of her four sons and supporting her family as best she could.

But a shot at the career she’s always wanted is finally within reach, and this time, it’s on her terms.

In August, Lopez received a $2,000 loan from the nonprofit Grameen America, which expands its reach in Connecticut and provides financial capital to help low-income residents. She uses this money to start her own business: a kitschy fashion line inspired by her family.

Grameen America’s foray into Connecticut marks a new era for the microfinance giant, which until now has focused its efforts primarily on urban centers rather than entire regions.

The problem of access to money while being poor

Borrowers of limited means have historically been able to obtain loans from local banks, but many local banks have been taken over by conglomerates. And local banks that have remained small must follow legislation passed after the 2008 banking crisis that imposes restrictions on the risk they can take in lending.

This means it has become harder to get a loan, especially for people who have traditionally struggled to borrow – women, people of color and low-income people.

It is this group of people that Grameen hopes to help with its expansion into Connecticut.

“Our mission is to provide financial mobility to our members and to foster financial inclusion in multiple aspects, because we know that the most vulnerable populations are those who are left behind by the banking system … or any formalized financial system,” said Grameen Vice President of Strategy, Rajitha Swaminathan.

Grameen says she focuses on a specific segment of this vulnerable population: the nonprofit only gives microloans to women living in poverty, and the amounts start small.

Initial loans range from $500 to $2,000, according to company communications director Jason Grobstein. Borrowers have 26 weeks to repay their loans at 18% interest, although interest decreases weekly over the life of the loan.

This is different from traditional lenders, which, even for customers not looking for a loan, can charge overdraft fees, debit card swipe fees, ATM withdrawal fees and bank transfer.

Financial top-ups often keep low-income people out of mainstream banking, according to experts like banking law professor Mehrsa Baradaran, author of “How the Other Half Banks.” The Federal Reserve in 2019 estimates that 22% of Americans don’t have a bank account at all or mainly use cash and credit cards to make purchases.

Those without abundant access to financial services must rely on other sources to access the funds they need to stay afloat. Without typical loans, researchers have observed that low-income people look to payday lenders, auto title loans, and point-of-salewhere liquidity barriers are low and interest rates high.

For example, the Federal Reserve Bank of St. Louis reported that the average interest on a payday loan is 391%. By contrast, the average credit card charges about 17.8% interest per month, according to consumer financial services firm Bankrate.

Statistics show that alternative loans often cause a spiral of problems for borrowers. Progressive think tank the Center for American Progress estimates that 80% of payday and auto title loans will be “renewed or followed by an additional loan” after two weeks. Borrowers remain in debt for an average of six months.

Bridging the gap

Microlenders like Grameen America say they aspire to bridge the gap between what exists for middle- and upper-class Americans and what is currently available to less affluent customers.

For one, the loans they make are not to an individual: Grameen America uses a “group loan” model pioneered by its sister organization Grameen Bank. To qualify for a loan, people must form groups of five and complete five days of financial training that teaches the basics of business and finance. Even after the initial classes, borrowers should meet with their cohorts and staff members to bond within the center and learn from each other as each woman grows her business, spokespersons for the center said. the company.

“We are very, very touched. We meet with them every week,” Swaminathan added. Members must also repay their loans weekly.

Does microcredit work?

Grameen has for decades touted microcredit for its ability to lift people out of poverty. It is this philosophy that won the founder of the Grameen Bank, Muhammad Yunus, the Nobel Peace Prize in 2006.

Critics, however, argue that microcredit can do more harm than good. Some studies of microcredit and its effectiveness have found that, at best, small loans have a “modest positive” effect on people living in poverty.

Simultaneously, researcher Milford Bateman, who wrote “The Rise and Fall of Global Microcredit”, argued that “the global microcredit industry had indeed been taken over by greedy individuals, opportunistic so-called ‘social entrepreneurs’ , aggressive private banks and -nose investors.

But those scruples are exactly why Quinnipiac University professor Mohammad Elahee said he believes in the power of Grameen’s specific strategy for microcredit loans. For one thing, Grameen America is a nonprofit organization. According to Grobstein, director of communications for Grameen, all money the company earns funds the overhead costs of their centers and future expansions.

This strategy, Elahee said, is an implicit recognition of the limitations of microcredit.

If “I’m a microlender, I’ll never really make any money,” he said.

A community approach to lending is also important for the success of microcredit, according to Elahee. He said he thinks loans are most effective within groups with strong shared experiences.

“It can work, but not for a college graduate who just wants to start a new business and get a microloan,” he said. “People who are at their lowest economically, who have no credit history, who do not have access to regular lines of credit – for them, a microloan is like a new lifeline .”

While Grameen lends specifically to low-income women, Elahee can also imagine positive outcomes among refugees, recent immigrants and formerly incarcerated people — three groups who often face barriers when trying to find work in the states. -United.

Grameen America lands in Connecticut

Although the local strategy is to anchor itself in communities with dense populations and high financial needs, Grameen said it plans to establish a presence in six cities. The company already serves residents of New Haven and Bridgeport, but plans to expand to Stamford, Waterbury, New Britain and Hartford.

In its first two Connecticut centers, the average Grameen loan was about $1,844, but loans are increasing as businesses expand. Nationally, the average Grameen America loan is around $4,500. Like Jennifer Marie Lopez of New Haven, many of its members run businesses in the fashion industry.

Years after his offer to Betsey Johnson fell through — and some four months into his loan spell — Lopez is steadily chasing his own dreams. Jenna Line Customs, she said, is just the beginning.

“I just want to open a school in New Haven for fashion,” she said.

There is no dedicated fashion school in New Haven currently, and Lopez said she wants hers to be full-service. Not only does she want to teach students how to design clothes, but she also wants to show them how to model and market their crafts.

Although her own fashion career is still in its infancy, Lopez is undeterred. She has already started giving modeling lessons through Grameen, and she hopes this will eventually open more doors.

“I’m going to do my best to make it happen,” she said. “I will work as hard as possible. And I hope I could do it.