SOFIPA 9
Rosalía, along with eight entrepreneurial women from her neighborhood, has launched a new lending group. With support from Sofipa, these women now have access to the crucial financing they need to grow their small businesses.
€150,000
7.00%
18 months
6 months
USD
CurrencyAmount | €150,000 |
Interest | 7.00% |
Maturity | 18 months |
Repayments | 6 months |
Currency | USD |
The project
For years, Rosalía has been running her own business but has struggled with limited access to the financing that could help her increase her income. Since she only needs a small amount, traditional banks have not been an option. However, through a group loan from Sofipa, she now has the opportunity to invest in her business. As the name suggests, a group loan isn’t something you do alone. Determined to make it work, Rosalía sought out and connected with eight other women in her community who faced the same challenges. Together, they formed a new lending group called "Guiechachi."
Fun fact: "Guiechachi" means "place where weaving is done" in the indigenous Zapotec language of Oaxaca. The weaving of textiles holds great cultural and economic significance for Zapotec communities.
How does a group loan work?
Every four months, the women receive an amount that suits their personal circumstances. These loans operate on a 16-week cycle (4 months), during which the women build a credit history that can later help them secure a formal bank loan. For their first loan, a group member can borrow up to 7,000 Mexican pesos (approximately 340 euros).
No collateral is required for a group loan, as the women guarantee each other's loans, fostering strong social bonds. The women meet weekly, guided by a Sofipa coordinator, to repay a portion of the loan. These gatherings are opportunities for connection, motivation, and knowledge sharing.
Investing in their economic activities strengthens the position of these women within their families and communities.
What social return could your investment generate?
Financing is critically needed in southeastern Mexico, where Sofipa operates. Historically, this region has faced the greatest challenges, with the state of Oaxaca showing alarming poverty rates. This is the result of deficiencies in education, infrastructure, and basic services, which have hindered development. The situation for women in this area is even more difficult, further widening the gap. A loan empowers women, creating equal opportunities and making them stronger.
By investing in this Sofipa project, you enable around 480 women to access a group loan.
What financial return could your investment generate?
- Annual interest rate of 7%
- The maturity of the loan is 18 months
- Grace period: This project has a grace period. After 12 months, you will receive your first repayment of your investment, and thereafter, you will receive a repayment every 6 months.
- With an investment of 1,000 euros, your expected total repayment would be 1,088 euros
- Please consider that although you invest in EUR, the loan is in USD, so there is a risk of exchange rate fluctuations between dollars and euros. For more information on potential exchange rate risks, please visit our currency page.
The story of Sofipa
Financial inclusion is one of the problems the region of Oaxaca in Mexico is facing. The scarce offer of financial services specialized in reaching low-income citizens inspired the emergence of Sofipa in February 2004. With its existence, Sofipa contributes to financial inclusion and the region's overall development.
Sofipa started operating under the legal figure of the Cooperative Society. However, in search of being more competitive and innovative, in 2016, they decided to adopt the legal formation of an Investment Promotion Company, SOFOM, ENR. Read more about Sofipa on their company profile page. Since then, it has enabled at least 10.000 women to expand their businesses and improve the lives of their families.
Sofipa in numbers
- Founded in 2004
- 467 employees
- Loan portfolio of €13,968,857 (end of 2022), for female group loans
- Approximately 10.000 credits to women a year
Company name | SOFIPA |
CEO | Francisco Diaz |
Founded | 2004-02-01 |
Location | San Antonio de la Cal |
Sector | Financial services |
Turnover | €9,100,000 |
Employees | 467 |
Credit score | A+ |
Impact
97% of Sofipa’s clients are female entrepreneurs. Mainly active in the informal sector, the most significant need of these women is access to the financial system.
The goal of the Mexican microfinance institution is to end poverty by giving people growth opportunities and fight for gender equality by helping women to improve their income. They have been able to support more than 14,500 women so far.
Sofipa offers female entrepreneurs credit through group loans. Read more about how group loans work in the introduction blog post of Sofipa here.
Sofipa has a presence in 7 of the 32 states and is particularly active in two states with the highest poverty rates in Mexico, Guerrero with 38.41%, and Oaxaca with 33.49% of the national level.
A study, conducted by 60 decibels, shows the following results of impact and customer satisfaction among Sofipa clients:
· 1.2 Inclusion Index (view here)
· 71% think that Sofipa is a good financing alternative
· 83% intend to use the loan to grow their existing businesses
Research shows that women in emerging markets invest 90 cents of each extra dollar they earn in their families and immediate environments. This translates into better schooling, healthcare, overall lifestyle, and eventually, economic growth.
Providing female entrepreneurs with suitable financing options helps them overcome those barriers that keep them from starting or growing their businesses. Specific loan features that appeal to the typical female SME owner are longer-term loans, lower interest rates, alternative collateral, and repayment grace periods.
SDGs impacted
With this project, you are contributing to the following Sustainable Development Goals:
SDG 1 - No poverty
SDG 5 - Gender equality
SDG 8 - Decent work and economic growth
SDG 10 - Reduced inequalities
Read more about the impact you can make through our platform and the SDGs on our impact page.
Related blog articles
- Get to know 3 female entrepreneurs who benefit from a loan through Sofipa.
- Female entrepreneurs are essential for a powerful economy. Read why here.
- Want to learn more about gender lens investing? Click here.
- Want to learn more about how financial inclusion can thrive entrepreneurship? Read here.
- With this investment 480 lives are improved