How A New Micro-Loan Program in Haiti Strengthens a Responsible Supply Chain

By Kelsey Halling

Nadine Phillippe runs a recycling-collection center in a town called Les Cayes in the south of Haiti.

She buys plastic bottles from individual collectors in her neighborhood. Then she sells in quantity to processing facilities in Port-au-Prince that clean and flake the plastic before shipping it to the U.S. where it’s eventually transformed into different types of polyester fabric by our company, Thread.

Nadine is a strong businesswoman. She’s weathered drops in prices due to the fluctuating commodity market, and she faces challenges with transportation in a country with a struggling infrastructure. Yet, the thing that caused her to close her business last Christmas, during her busiest cycle of the year, was a broken scale used to weigh bottles — a scale that costs roughly $50.

We want Nadine to thrive

Nadine’s situation is not unique.

The entrepreneurs in our supply chain face small margins and tight cash flow. Something as seemingly inconsequential as a broken scale is enough to close them down.

Entrepreneurs like Nadine provide income opportunities to thousands and jobs for hundreds, in recycling collection networks across Haiti, which has staggering unemployment.

These entrepreneurs also are the base of our supply chain at Thread. We rely on them for the consistent volumes and quality of raw material we need for our fabric. We’ve purposely tied our success to their success. Thus, we need centers like Nadine’s to remain open, buying plastic, and running smoothly for the long term.

Launching a micro-loan program for people like Nadine

In March, at our first quarterly supplier meeting of the year, we announced to 40 attending suppliers that we would offer no-interest loans to assist with problems such as broken equipment, or to help grow their businesses.

Access to small business loans are hard to come by in Haiti, especially in the neighborhoods where many of our suppliers operate. Even if a loan can be secured, market interest rates in Haiti can be above 20 percent. That fee is unfathomable to most of us in the U.S., let alone small business owners in Haiti.

While Thread won’t charge interest, make no mistake: These are loans. The agreement with our suppliers is that the money must be paid back in order for us to continue the program.

Thread is not a nonprofit; we can’t provide handouts. We believe strongly in sustainable businesses and jobs being the solution to poverty. The idea is for the loan program to become a self-sustaining fund to assist legitimate business needs. We’re starting small and will look into increasing both the amounts and number of loans awarded once we’ve established the proof of concept.

So far, so good

In April we received 22 applications and awarded three loans to purchase new scales.

It’s rather uncommon for a for-profit company to become involved in the world of micro loans, but we’ve already seen benefits beyond the much needed access to capital. The loan program is helping Thread staff offer additional training around financial education and business strategy by giving us greater insight into the challenges faced by our suppliers.

We will keep the remaining applications on file, and all applicants will be given feedback, as well as the option to revise their application, before the next loan cycle.

The benefits of micro loans are well known in the philanthropic world, and I have no doubt the positive impact of these loans will ripple out beyond Thread’s supply chain to affect the neighborhoods where these centers are located.

Investing in our triple bottom line

A week after announcing the loan program, I received an email from one of our suppliers, Antonio, who runs a center in Cite Soleil, one of the poorest neighborhoods in the Western Hemisphere:

"Me, as a center owner in Cite Soleil, I face a loan problem. Because of the area my business is located; people are always scared to give us a loan," Antonio wrote. "Because when you say you are from Cite Soleil everybody has an idea of who you are. So, the loan that Thread puts available for the centers is very important for us. Thanks again to Thread for its help."

As Thread’s director of impact, I’m thrilled with this program. To me, it exemplifies what it means to operate as a triple-bottom-line company. The micro loans provide social benefit by keeping the income opportunities in the supply chain open. The supply chain performs a valuable environmental benefit. And the efficiency and resilience of the supply chain strengthens the financial health of the entire value chain.

Follow Thread for updates on the loan program as we continue to roll it out over the year and share stories of what our suppliers are accomplishing.

Images courtesy of Thread

Kelsey Halling is director of impact for Thread. She measures, manages, and improves the impact Thread has on people, planet, and profit at every step of Thread’s supply chains, ensuring that the claims of making the most responsible fabric in the world are true.