This brush with a long-held dream characterizes the kind of missed opportunities that Lopez has seen time and time again. She tried to enroll in Fashion Institute of Technology in Manhattan after her stint in tech school, but high costs and personal responsibilities drove her away. Fashion design has finally become a delayed dream; Lopez focused on her job as a nurse and security guard, taking care of her four sons and moving her family forward as best she could.

But a chance for the career she always wanted is finally at hand, and this time, it’s on her terms.

In August, Lopez received a $ 2,000 loan from the nonprofit Grameen America, which is expanding its reach in Connecticut and making financial capital available to help low-income residents. She uses this money to start her own business: a kitsch 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 accessing money while being poor

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

This means that it has become more difficult to get a loan, especially for people who have traditionally struggled to borrow – women, people of color, and people with low incomes.

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

“Our mission is to offer financial mobility to our members and to promote 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 financial system. formalized, ”said Rajitha Swaminathan, vice president of strategy at Grameen.

Grameen says he is focusing on a specific slice of this vulnerable population: the association only grants microloans to women living in poverty, and the amounts start small.

The initial loans range from $ 500 to $ 2,000, according to the company’s communications director, Jason Grobstein. Borrowers have 26 weeks to repay their loans at an interest rate of 18%, although the interest decreases weekly during the life of the loan.

This is different from traditional lending agencies, which, even for non-loan-seeking clients, may charge overdraft fees, debit card fees, ATM withdrawal fees, and wire transfer fees.

Financial supplements often keep low-income people out of the traditional banking industry, according to experts like banking law professor Mehrsa Baradaran, author of “How the Other Half Banks.” The Federal Reserve in 2019 estimated that 22 percent of Americans do not have a bank account at all or primarily 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 observed that low-income people turn to payday lenders, auto title lending, and cash checkpoints, where barriers to cash 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%. In contrast, the average credit card charges about 17.8% interest per month, according to consumer financial services company 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 percent of payday and auto title loans will be “rolled over or followed by an additional loan” after two weeks. On average, borrowers remain in debt for six months.

Bridging the gap

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

On the one hand, the loans they make are not made to an individual: Grameen America uses a “group lending” model developed by its sister organization Grameen Bank. To qualify for a loan, individuals must form groups of five and complete a five-day financial education that teaches the basics of business and finance. Even after the first few classes, borrowers should meet with their cohorts and staff to bond within the center and learn from each other as each woman grows her business, company spokespersons said. .

“We are very, very touched. We meet with them every week, ”added Swaminathan. Members are also required to pay off their loans weekly.

Does microcredit work?

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

Critics, however, argue that microcredit can do more harm than good. Some studies on microcredit and its effectiveness have found that, at best, small loans have a “modestly 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 has indeed been taken over by greedy individuals, so-called ‘entrepreneurs. social “, aggressive private banks and investors in the nose.

But these qualms are exactly why Quinnipiac University professor Mohammad Elahee said he believed in the power of Grameen’s specific strategy for microcredit loans. On the one hand, Grameen America is a non-profit organization. According to Grobstein, director of communications for Grameen, all of the money the company earns is funding the overhead costs of their centers and future expansions.

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

If “I am a microlender, I will never make any money,” he said.

A community-based approach to lending is also important for the success of microcredit, according to Elahee. He said he thinks loans work best in 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 microcredit,” he said. “People who are at the bottom of an economic point of view, who have no credit history, who do not have access to regular lines of credit – for them, a microcredit is like a new lifeline. safety.

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

Grameen America lands in Connecticut

Although the local strategy involves rooting in communities with dense populations and high financial needs, Grameen said he 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 around $ 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 bid at Betsey Johnson failed – and around four months after his loan began – Lopez is steadily tackling his own dreams. Jenna Line Customs, she says, is just the start.

“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 has 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 his own fashion career is still in its infancy, Lopez is not discouraged. She has already started giving modeling lessons through Grameen, and she said she hopes this will eventually open other 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.