In west Nepal, poverty is rampant and financial resources are scarce. Since much of the area is rural and isolated, there are few options for families who are seeking opportunities to break out of poverty. Many times, those who have resources exploit those ensnared in poverty. Loan sharks are often the only financial option for families seeking a small business loan. Because there is no competition, these predatory lenders charge an exploitative 25-35% interest rate.
Several years ago, Khadananda and his family were in need of a loan. At the time, the loan shark offered the only credit in their village. So, Khadananda had no choice but to accept a 34% interest rate. While the loan allowed him to generate more income, it all went toward the loan payments. By the time the loan was paid off, his family was no closer to a brighter economic future.
Then financial hope quite literally came to Khadananda’s village. The HOPE Fund, ServLife’s microfinance program, began distributing loans in the area, offering an alternative to predatory lenders. Khadananda was selected for a loan of $600, which was used to purchase a water buffalo and its calf. He wisely began selling the milk, bringing in a profit of $25-$30 a month. Because the loan was offered at an interest rate below 2%, he was easily able to repay the loan while doubling his family’s income at the same time. For the first time, Khadananda was breaking out of the chains of poverty.
Since its start in Khadananda’s village, the HOPE Fund has distributed 18 loans there, five of which were given this year. Khadananda has been an essential part of this process. After repaying his loan, he became the chair of the board that oversees the HOPE Fund in his village, ensuring that loans are distributed fairly and where needed most. Khadananda and ServLife are doing what the HOPE Fund set out to: radically change the economic outlook of the community in the name of Jesus.