HOW IS UB2 UNIQUE?
UB2 is the first and only Christian organization that makes repayable microloans through Christian microlending organizations to men and women with a plan to build their businesses from start-up to self-sufficiency. We work through individual lenders and sponsoring organizations, connecting them with our Field Partners to build enterprises with the poor. Check out our Community-to-Community Ministry (C2CM) for more info about how your church can sponsor a people group. CLICK HERE for a flyer about the C2CM. UB2 is a non-profit, tax-exempt public charity (501(c)3).
Please CLICK HERE for a general flyer about UB2.
If your question is not answered on this page, please feel free to contact us at Build@UBuild2.org. Also, there is a wealth of information about us on the Organizational Documents page. Thank you for your interest.
MAKING A MICROLOAN
How do I make a microloan?
You may make a microloan in one of two ways: You may use the online service or you may send us a check or money order. There is no cost to you for using the online service.
If you make a loan with a check or money order, pleas make it payable to “UBuild2.org.”
What happens if my microloan is in excess of the amount requested by an Entrepreneur?
One of two things: If the loan request was completely fulfilled before you made your contribution, you will be informed and you will be given the opportunity to choose another Entrepreneur to make a loan to. On the other hand, if your loan fulfills the loan request, but the final amount of the loan fulfillment is greater than the loan requested, your loan will go to the Entrepreneur you chose, and they will receive the loan plus up to 10% more than the amount they originally requested. For any amount greater than 10% more than the original loan request you will be given the opportunity to redirect that part of your loan that was in excess to another Entrepreneur.
How do I know how much of a microloan request has been fulfilled?
The balance of a loan request is updated as loans are made on UB2’s website. Loans made via a check deposit will be credited to the Entrepreneur’s account as they are received. If you pay with a check, you will be notified upon receipt.
Does my entire microloan go to the Entrepreneur?
Yes, your entire loan goes to the Entrepreneur, which is to say, a $50 loan from you is a $50 loan to an Entrepreneur.
Is interest charged on the microloans I make?
UB2 does not charge or pay interest on loans. However, an interest rate or administrative fee is charged on loans to Entrepreneurs by UB2’s Field Partners. It is usually a fraction of what is charged on small business loans in the countries where UB2 works. It is necessary for our Field Partners to charge entrepreneurs interest on loans in order to cover some of their own expenses.
Am I paid interest on my microloan?
You are not paid interest on your loan. Any interest an Entrepreneur pays on a loan goes entirely to the Field Partner who oversees the loan.
Is there a time limit for how long a microloan request is allowed to remain open?
A loan request may remain open for 30 days. If the loan request is not filled in that time, the Field Partner may request re-submission of the loan request.
Why are the microloans so small? Don’t Entrepreneurs need a lot of money to start or grow a business?
In developing countries microenterprises and small businesses often begin with just a few hundred dollars of start-up capital.
REPAYMENT OF MICROLOANS
What happens when a microloan is repaid?
Lenders are informed of repayment by email, and their online account is credited with “points.” One point equals one dollar. Lenders are given the opportunity to reinvest their loan points with other Entrepreneurs, to donate their money to UB2 for expenses and program development, or they may choose to have their money repaid to them.
How is my microloan repaid to me?
You may have your loan repaid to you by check via the US Postal Service.
What happens if I forget to reallocate my repaid microloan?
We will attempt to remind you of your opportunity to reinvest your loan after it has been repaid. You have 90 days to reallocate your repaid loan. If you do not reallocate your repaid loan within that time-frame it will be re-designated as an Orphan Loan. Orphan Loans are reallocated at the discretion of UB2.
Is it possible that I will not be repaid my microloan?
Yes. As with any transaction involving the building of a business there is always the risk that the Entrepreneur will default on a loan. Presently, UB2’s rate of repayment is 100%. However, we cannot guarantee repayment of your loan.
How does UB2 pay for its expenses in handling microloans?
We handle expenses through volunteer support and your donations. Please CLICK HERE to make a donation. Thanks!
How are UB2’s Field Partners paid for their expenses in handling microloans?
Entrepreneurs pay an interest rate or administrative fee on their loans to our Field Partners. This fee helps to cover the overhead expenses of our Field Partners which they incur for managing the loans.
DONATIONS & TAX DEDUCTIONS
Is my microloan tax-deductible?
UB2 is a tax-exempt, non-profit, 501(c)3 public charity. Donations to UB2 are tax-deductible. Loans to Entrepreneurs are not tax-deductible. However, if you convert a loan into a donation to UB2, it is tax-deductible. A loan from you may be turned into a tax-deductible gift to UB2 at any time. Gifts to UB2 may be used for loans, expenses, or programming.
If I make a donation to UB2 is it tax-deductible?
Yes, all donations to UB2 are tax-deductible according to IRS tax code 501(c)3.
How will I receive my receipts for microloans and donations to UB2?
You will receive receipts for loans and donations you make to UB2 via email immediately after you make your loan or donation. If you need a second copy of your receipt, you may request one at any time and UB2 will send you a copy. Also, a tally of your donations is listed on the Your Account, which you may open after login.
I know a person in Kenya (or another country), and I want to make a donation to him. Is that okay?
UB2 cannot be a conduit for donations to individuals. UB2 provides opportunities to make micro loans to persons who are a part of its lending program and have qualified for a loan through its application process. However, you may make donations to select projects and programs which may be found on the website.
What do you do with general donations?
Donations which are made to UB2 without restrictions (i.e., without a designation per a particular project or program) may be used by UB2 according to its discretion, which means, the money will be used for a loan, expenses, and/or programming of its choosing.
How does UB2 choose Entrepreneurs to sponsor?
UB2 identifies Entrepreneurs through its Field Partners in developing countries. Entrepreneurs are thoroughly screened before they are identified as possible candidates for loans.
How does UB2 choose Field Partners?
UB2 chooses Field Partners based on their track records for successful microenterprise development, financial transparency, and for their reputations in their communities. Please see our Field Partner page for more information.
INFLATION & CURRENCY RISK
How are inflation and currency risk handled?
Lending between countries is intrinsically risky especially as regards inflation and currency exchange fluctuations. We use the following policies to manage these risks.
- Field Partners assume responsibility for inflation risk.
- Field Partners and Lenders share responsibility for currency exchange risk.
The Field Partner assumes inflation risk by including anticipated inflation in the interest rate it charges an entrepreneur for a loan. For example, a field partner charges 10% APR for a loan to cover administrative overhead. In addition, it adds the anticipated rate of inflation of 7%. Thus the Field Partner charges an entrepreneur 17% interest for a loan.
17% will appear to be high to a person who lives and works in a country with a stable banking system and currency. However, in a developing country fraught with a broken socio-economic and political system, the interest charged by one of our Field Partners is likely to be less than half what would be paid to an ordinary bank or another financial service provider.
In contrast with the way inflation is handled, currency exchange risk is assumed by the Lender. Because all of our Field Partners are small community-based organizations, such as churches, we do not want to burden them with this financial burden.
Because calculations for currency exchange fluctuations include inflation, inflation must be subtracted from currency exchange adjustments in order to determine what it is.
Here’s an example of how this might work in an imaginary situation. “USD” is American dollars, and “ECT” is the currency of the entrepreneur’s country.
Exchange Rate: USD 1 = ECT 100 (Inverse Exchange Rate: ECT 1 = USD .01)
Loan: USD 500 = ECT 50,000
Total interest paid on loan by Entrepreneur: 17%
- Administration fee: 10% APR (Annual Percentage Rate)
- Anticipated Inflation: 7% IRB (Interest Rate Buffer)
Loan Repaid One Year Later
Exchange Rate: USD 1 = ECT 130 (Inverse Exchange Rate: ECT 1 = USD .0077)
Loan Repaid (in local currency), including IRB & APR: ECT 58,500 / USD 450.45
Loan Repaid (in local currency) without IRB & APR: ECT 50,000 / USD 385
Change in Loan Value: USD 385 – USD 500 = Loss of USD 115 (-23%)
Distribution of Loss in Loan Value: USD 115 / 23%
- Field Partner: IRB 7% = USD 35
- Lender’s Currency Exchange Loss (CEL): 23% – 7% = 16% / USD 80
Value of Loan for Redistribution After Lender’s CEL: USD 500 – USD 80 = USD 420
- USD – US Dollars
- ECT – Currency of Entrepreneur’s country
- APR – Annual Percentage Rate
- IRB – Interest Rate Buffer
- CEL – Currency Exchange Loss
IDENTITY & MISSION
In what ways is UB2 a “Christian” organization?
UB2’s driving passion is to answer God’s call to love Him by loving our neighbors. We are attempting to fulfill this call by empowering the poor through microlending. Please see our Statement of Faith on the About Us page.
Does a person have to be a Christian to be considered for a microloan?
No. UB2 provides microloans to persons without discrimination as an ambassador of God’s love through Jesus Christ to all people.