‘Everyone wins’ with investment in microloan programs

Question: Feed the Hunger Foundation provides microloans to small businesses and has done 38 loans in Hawaii and over 3,000 worldwide. You are looking for investors. What are the advantages and disadvantages of investing in a microloan program?

Answer: Unlike traditional investment opportunities with banks and other financial institutions, contributing to a microloan program of a nonprofit like Feed the Hunger Foundation yields not only monetary returns, in some cases even more than mainstream financial products, but also multiplying instances of social good. You are investing in the triple bottom line. You can see the positive impact in your community, not just on your financial statement.

With Feed the Hunger Foundation, your money funds microloans for a wide range of businesses involved in Hawaii’s sustainable food production. Farmers, mom-and-pop cafe owners, food transporters and producers — all creating greater access to local healthy food on the islands as well as more jobs. Everyone wins.

Just as an example, we have helped a group of farmers in Kunia successfully create a farm that supplies fresh produce to a senior center in Ewa. The farmers win; the seniors have access to fresh food; and our investors have a successful project in which to take great pride.

We do invest in people who some may classify as "unbankable," yet we have countless inspirational stories about our loan recipients and an extremely high loan repayment rate. We prove there is no one-size-fits-all measurement for determining a business’s worthiness for a loan.

Q: What is the minimum investment, what is the yield and what are the restrictions?

A: Our minimum investment is $50,000, but we are able to help small-scale investors aggregate funds to form a hui. An investment with our nonprofit yields 2 percent interest with the principle being paid back after three years. Compare that to a three-year CD, which currently yields on average under 1 percent, according to the Federal Deposit Insurance Corp. — an investment with us simply makes both financial and social sense. Some restrictions do apply.

Q: What is the default rate on Feed the Hunger Foundation microloans?

A: We have seen great success with our loan recipients. They pride themselves on their ability to pay borrowed funds back so the next recipients can realize the benefits. Working one-on-one with our borrowers and connecting them to resources, we have a low default rate of 3 percent.

Q: Are the investments insured in any way? Has anyone lost money investing in your microloan program?

A: Like most investment opportunities, ours are not completely void of risk and are not secured. We, however, acutely manage our portfolio of loans, and none of our investors has lost money through our program.

Q: How many investors have signed up so far, and how much have they invested?

A: Currently we have 11 investors who have contributed $1.15 million, and we are working with an ohana of five members planning to pool funds for a $50,000 investment.