In remote rural areas, similar to those in which the Ecumenical Sangam is working, it is sometimes difficult or even impossible to get a loan with reasonable conditions. This often restricts economic development, since poor but skilled, entrepreneurial and economically active people do not have any possibility of starting a small business due to a lack of capital. In this situation microfinance can help to foster economic development by providing small loans and other financial services at affordable interest rates and according to the special needs of the poor rural people. With the help of a small loan the productive rural population will be enabled to work independently and use their skills to gain higher levels of family incomes.
The Ecumenical Sangam's Microfinance (mF) scheme started in July 2008 and since then the Sangam has provided “refundable financial aid” to its former students of the Sangam’s technical and sewing classes. This financial aid is meant to be used for the start-up of small businesses such as tailoring shops and repair businesses.
The Sangam makes a holistic approach to mF and every applicant who applies for the refundable financial aid has to attend obligatory training. In this training he or she will be introduced to the basic business-related topics, including business-plan making, marketing, book-keeping and other subjects which are on the Ecumenical Sangam's programme like health, hygiene, social matters or watershed.
The Ecumenical Sangam also plans to gradually extend its mF activities to the existing Self-Help-Groups in the area served by the Sangam and provide suitable training and financial aid to individual members of these groups. In adopting this approach to Microfinance the Sangam not only teaches the technical skills of how to work productively, but also assists in financial matters – especially in the very first stages of a new business, which often is a difficult time.
The initial funds to start this Microfinance scheme have been made available through the Sangam's German Partner DIZ who in turn obtained a grant from the Hessian State Ministry of Economic Affairs.
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