Frequently asked questions

What is microfinance?

Microfinance is a system of financial services provided to the often excluded poor to try to help them escape poverty. The poor are often excluded from traditional financial services as they frequently do not have the required collateral for taking out a loan. The microfinance movement was pioneered in Bangladesh in the 1970s by Muhammad Yunus and the Grameen Bank. Yunus and the Grameen Bank were jointly awarded the Nobel Prize in 2006.

Microfinance continues to expand, mostly in developing nations. It consists of a number of different financial services that traditional banks do not provide to poorer people including microcredit (loans of between 50 to 500 dollars for start up business ventures), and saving and insurance services.

Microfinance is grounded in the belief that many poor people remain trapped in poverty due to a lack of access to credit and other financial services – and, conversely, that small capital injections can enable significant economic and social improvements for borrowers. Microfinance relies on the thriftiness, reliability, and entrepreneurial vision of poor borrowers– qualities that have been demonstrated and documented countless number of times.

When operated responsibly, microfinance can fill the gap left by traditional banks, while significantly lowering borrowing costs for small entrepreneurs (usually from informal loan sharks) – in some cases, by a factor of ten or more. Though the amounts of money are small, they can have great impact on people’s lives. A loan of US$100, for example, might allow an unemployed woman to open a roadside food stall, buy raw materials at lower cost, or purchase extra livestock – and those profits, in turn, can be invested to increase the educational opportunities, health, and nutrition of an entire family.

What is responsible tourism?

Responsible tourism shares many similarities with sustainable tourism (focus on social justice, environmental integrity and creating local jobs) but places responsibility on the behavior of individual actors such as tourists and tourist operators rather than governments. According to the Cape Town Declaration on Responsible Tourism, responsible tourism is:

  • Culturally sensitive, encouraging respect between tourists and hosts, and building local pride and confidence
  • Generating greater economic benefits for local people and enhancing the well being of host communities
  • Providing more enjoyable experiences for tourists through more meaningful connections with local people, and a greater understanding of local cultural, social and environmental issues
  • Involving local people in decisions that affect their lives and livelihoods Minimizing negative economic, environmental and social impacts

How do we select entrepreneurs?

Bloom Microventures have a rigorous screening process to ensure that in their communities, the borrowers we are working with are among the poorest of the poor that often cannot be reached by traditional microfinance. The starting point for our work in Vietnam is the National Poverty Status card, which is issued by the Government of Vietnam every year indicating the poverty status of the household. We only take households who hold these cards, i.e. live below the poverty line, into our programme. In rural Vietnam, our first project site, this poverty line is at 400,000 VND per person per month (approx. $20), so around $0.67 a day. This first selection criterion is supplemented by a poverty assessment using the Grameen Foundation's Progress out of Poverty Index (PPI). Potental borrowers must furthermore present a plan to us detailing how they want to use the loan funded through our guests' tour fees. If we find the plan viable to improve our borrowers' and their families' livelihoods, and the above mentioned criteria are met, the borrower is eligible for a loan from us.

How much is the standard loan?

We use a dynamic incentive mechanism increasing the loan size available based on prior loan repayments with us. The initial loan depends on what the individual need is, as well as how many people come on a tour. However, the initial loans are likely to generally be no more than $300 with most beginning at $100–$150 US.

What are the tours like?

View the itinerary and pictures from our tours in Vietnam (at bottom of page).