Unfortunately these needs for capital are rarely filled because the poor lack the collateral necessary to receive a loan from traditional banking institutions. Instead, low-income entrepreneurs are forced to turn to similarly impoverished family members or local moneylenders who charge outrageous interest rates. 

Microfinance practitioners have created innovative lending mechanisms such as group lending that allow microfinance institutions to lend successfully at reasonable interest rates without requiring collateral. These techniques have yielded very high repayment rates. According to the Microcredit Summit Campaign, the average on-time repayment rate for this type of microcredit is more than 97%. 

By funding profitable investment opportunities identified by low-income entrepreneurs, microlenders can speed economic development and empower low-income individuals to lift themselves out of poverty.

Microfinance in the Palestinian Territories

• Nearly 50% of Palestinians in the West Bank and Gaza live below the poverty line.
• The traditional requirement of property or salary-backed collateral poses a particular problem in the Palestinian Territories where the majority of land is not titled and over 30% of the population is unemployed.
• According to PlaNet Finance, micro-enterprises comprise more than 95% of all businesses in the Palestinian Territories. However, 90% of micro-entrepreneurs in the West Bank and Gaza have no access to credit services.

There is a dire need for microfinance services in the Palestinian Territories. LendforPeace.org is working to fill this need in order to reduce poverty and lay the foundations for a lasting peace.