Heather Lucas poses with Maria (no last name given). Maria borrowed $50 from the Katalysis microlending program. With the funds, she was able to open a table-top undergarment business in El Salvador. (Courtesy photo)

Lending a hand

Nonprofit organization seeks to end world poverty one loan at a time

Imagine you have an ingenious idea for your own business and all it would take is a little startup capital. Now imagine that the nearest lending institution is several bus rides and a day away, plus you have no collateral and have no idea how to apply for a loan.

For many Central American people, it is a reality that is all too common. Katalysis Bootstrap Fund is a Stockton-based nonprofit organization that is working to end poverty with microfinancing and enlisting the help of business owners such as David and Heather Lucas, of Lodi, who own The Lucas Winery.

Katalysis was formed in 1984 and was based on a system of microlending that was created by Dr. Muhammad Yunus in the '70s. Yunus received the Nobel Peace Prize in 2006 for his concept and work in microlending.

A network was formed through Katalysis and began working in Belize to help revitalize the area. After the organization learned that the poor people of Belize could pay back loans, they built a network of microfinance institutions in the region.

The Katalysis Bootstrap Fund was founded in 2000 with a goal of setting up a lending network that could reach economically impoverished areas such as Nicaragua, El Salvador and Honduras.

"Our job is to find socially responsible institutions and donators," said Stuart Krengel, the development associate for Katalysis. "As our loan fund grows, we are looking to reach a goal of roughly $10 million." Krengel said that figure will help the organization to become self-sustained without a need to solicit donations. Krengel said that Katalysis is getting close to the goal and has about $5.2 million in funds now.

David Lucas, right, stands with Raul (no last name given), who borrowed $200 from Katalysis to start a custom-made furniture business. Raul travels for two hours by bus to buy the raw wood planks that he uses to build his products. (Courtesy photo)

Katalysis works with various individuals and business owners throughout the Central Valley and Bay Area to ensure the organization continues to reach its goals and help its loan recipients.

David and Heather Lucas discovered Katalysis three years ago when they were watching a program documenting microfinancing and its benefits.

They began to research and see if there were any microfinancing agencies in the area. They found one in Davis and Katalysis in Stockton. They contacted the organization and began to donate. Heather Lucas has volunteered her time each Friday for the past two-and-a-half years.

Every year, Katalysis plans trips to the regions where their loans make a difference so that those involved can see the results. The Lucases have made each trip for the past three years.

"It's an all-encompassing trip that really focuses not only on the end borrower; it focuses on the microfinancing institution itself, the cultural and political climate as well," Krengel said.

On their last trip, the Lucases met several of the borrowers and saw how the money was able to help. One such woman, named Maria, borrowed $50 and opened a table-top undergarment business in San Salvador's central market. Her business has grown, allowing her to add another table and two employees. The average amount lent through Katalysis is $174.

"It's just nice to be involved in something that's giving back," Heather Lucas said. "There's a lot of need for women with children in Central America, and microfinancing seems to target that population."

Another woman, Antonia Ordonez of Guatemala, initially borrowed $140 to start a restaurant that revolved around a recipe for fried chicken. Such is the demand for her dishes that she has expanded, repayed her loan and has since borrowed more to add more to her business, according the Katalysis Web site.

The potential business owners can travel to the financial institutions, but in most cases, the loan officers travel out to the villages to reach the borrowers.

"(The borrowers) don't even have the collateral," David Lucas said. "Usually, the loan is made based on the reputation the person has in the community."

Though the interest rates are usually quite high, the repayment amount is about 97 percent, David Lucas said.

David Lucas said that the funds go to the people and operate in a true business environment. He and Heather will be hosting a fund-raising event in October for Katalysis at the Lucas Winery.

For more information on the Katalysis Bootstrap Fund, to volunteer or donate, visit www.katalysis.org.

Contact Business Editor Marc Lutz at marcl@lodinews.com.