Novica started as a dream to completely re-invent the supply chain of artisan crafted products. We set forth and built offices in Africa, Asia and Latin America to work directly with artisans and cut out all of the traditional middlemen. It was no easy task, but we were driven by our mission and we had the support of great partners including National Geographic, the IFC/World Bank and Scripps Ventures among many others. We were successful in improving the traditional line of supply for artisans and customers in the following way:

Visit our Novica News page to see team videos and an interview with co-founder Armenia Nercessian.

Novica’s Artisan Loans website started as a similar dream. A dream to bring the benefits of microcredit loans direct to our artisans.

After trying repeatedly to obtain loans for our artisans through local institutions, exasperated, we took matters into our own hands and set up loan disbursement centers through our regional offices.

By going direct and cutting out the banks and financial middlemen, we are harnessing the power of the internet to connect customers with artisans and bring 0% interest rate loans to our artisans!

To succeed, we need your help. Novica works with thousands of artisans that need funding. Please spread the word to help us fund the first group so we can expand the program to more artisans.

You can browse and view individual artisan funding requests within our Artisan Loans section. When a specific loan request is completely filled, we'll release the funds to the artisan through our local office. The artisan repays the loan based on the repayment terms and at the end of the loan period the lenders receive their funds back.

We think Kiva.org is one of the best sites on the internet. We encourage our lenders and supporters to also support Kiva. Please visit the Novica Lending Team on Kiva for further information.

The main difference between Novica and Kiva is that we're disbursing the funds directly to the artisans through our offices, whereas Kiva disburses funds through partner MFIs to entrepreneurs.

Also, on Kiva, many of the entrepreneurs are in situations of extreme poverty. This is one of the great services that Kiva provides and we are proud to support them in this.

With Novica, artisans are already generating income through their Novica sales - your purchases have already made an economic impact.

Now with Novica's Artisan Loan program, artisans can access credit to grow and expand their current efforts. They can purchase new materials, better equipment, expand workspaces and hire additional staff to assist them. Through your purchases and your loans, together we can continue to grow small artisan businesses and make a significant impact on the artisan sector, generating economic development and preserving culture and traditional crafts worldwide.

Dr. Muhammad Yunus is a staunch believer that credit is a fundamental human right. He out set to develop a project whereby he provided loans suitable to people in dire economic conditions. By teaching them a few sound financial principles, Dr.Yunus was sure they could in turn help themselves. The Grameen (meaning "rural" or "village" in Bangla language) Bank Project was designed with the following objectives:

• extend banking facilities to poor men and women;
• eliminate the exploitation of the poor by money lenders;
• create opportunities for self-employment for people in Bangladesh
• bring the disadvantaged (mostly women from the poorest households) within the fold of an organizational format which they can understand and manage themselves;
• reverse the age-old cycle of "low income, low saving & low investment," into a virtuous circle of low income, injection of credit, investment, more income, more savings, more investment, more income."

Grameen Bank is at the forefront of what is now an international movement toward eradicating poverty through microlending. In 2006, the Nobel Committee recognized Muhammad Yanus and the Grameen Bank for their efforts in creating economic and social development. They were awarded the Nobel Peace Prize, which was divided in two equal parts, one half to Dr Yunus, the other to Grameen Bank. "Lasting peace can not be achieved unless large population groups find ways in which to break out of poverty. Micro-credit is one such means. Development from below also serves to advance democracy and basic human rights." (Oslo, 2006, Norwegian Nobel Committee).

Novica co-founders Roberto Milk and Armenia Nercessian met with Dr. Yunus at the World Ecconomic Forum in 2003 when Novica was recognized by the Schwab Foundation for Social Entrepreneurship. Muhammad Yunus, a member of the Foundation Board, delivered the award. His words and example planted the seed with the Novica team to explore ways to offer microcredit to Novica's artisans.

The UN Millennium Project identifies micro-credit as "one of the development strategies… that should be implemented and supported to attain the bold ambition of reducing world poverty by half."

Conventional banking systems cannot reach millions of poor for whom small loans could make a difference and there are several reasons for this, including the fact that they live in rural areas in dispersed communities. Low levels of education and lack of assets to put up as collateral are two more obstacles to securing a loan. As a result, they may only have access to loans through local money-lenders at exorbitantly high interest rates.

The principles behind microfinancing are different from general financing or credit in that it emphasizes the building capacity of a micro-entrepreneur, employment generation, trust building and, help to the micro-entrepreneur on initiation and difficult times. In other words, microcredit is a tool for socioeconomic development that relies on personal trust.

A key to microcredit is the recycling of loans, for when they are re-paid, they can be re-loaned, thus multiplying the value of each dollar in defeating global poverty, changing lives and communities.

With small sums of money, people are able to purchase the inventory, tools and supplies needed to start or expand microbusiness such as the weaving, crafting or carving workshops of Novica artisans.

Microfinancing helps in the development of an economy by giving people the chance to establish a sustainable means of income. Eventual increases in disposable income will lead to economic development and growth.

"Microfinance is helping to transform the lives of millions of people… helping to build businesses, create jobs and lift millions of people, men, women and children, out of poverty. (…) microfinance has done so while garnering repayment rates - up to 97 percent in some developing countries - that have been the envy of big banks and other financial institutions." (Mark Malloch Brown, 2004 in http://www.worldproutassembly.org/archives/microcredit_finance)

Through microcredit, more families can afford to send their children to school as well as access healthcare. Another aspect of microcredit programs is in skills training and female empowerment (women form the largest recipients of microcredit loans), contributing to a family's ability to cope with crises by increasing the variety of responses a family can make to a challenging situation. Gains made during prosperous times are partially protected during bad times, and the cycle of poverty is arrested.

The small ventures supported by mircocredits can grow into community businesses as artisans are able to invite neighboring artisans to work together.

Common criticisms of microcredit are (i) high interest rates and (ii) lack of sustainable long-term development opportunities.

Interest Rates. Microcredit interest rates typically range from 20 - 40% because banks and microfinance institutions incur a high level of expenses managing portfolios of many miniscule loans. Therefore, they need to charge a high enough interest rate to cover their additional expenses, such as field personnel and physical offices. With the Novica Artisan Loan program, because we're using our current infrastructure for relationship management and loan disbursement, we're able to subsidize these costs and offer 0% interest rate loans to the artisans.

Sustainable Long-Term Development. Some development experts contend that microcredit is a powerful tool for survival, but it is not a solution for sustainable economic development. In a recent New Yorker article, author James Surowiecki argued "What poor countries need most, then, is not more microbusinesses. They need more small-to-medium sized enterprises, the kind that are bigger than a fruit stand but smaller than a Fortune 1000 corporation." With Novica, as a result of your purchases and support, many artisans have grown over the past 10 years and many have hired employees to help with the additional orders. Now, with the Novica Artisan Loan program, together we can help continue expanding artisan businesses and successfully build small-to-medium sized businesses in the artisan sector - a foundation to sustainable economic development.

Lack of effective finance institutions has been a deterrent for would-be entrepreneurs with viable business plans from realizing their potential. Women, in particular, have been excluded as loan candidates in developing countries. The lending practices of MFI's offer people living in extreme poverty the opportunity to support themselves and their families, as well as realize their potential in the business community.

Benefits of MFI's go beyond microcredit services alone. They include savings accounts, insurance, health care and personal development. Fostering strong efficient financial markets is important in enabling communities to sustain economic growth, and this is more likely to occur when profits are sought by MFI's. They supplement existing non-profit charities by accessing far more capital than charity alone can gather.

Even though we are not anticipating that artisans will default on their loans, there is always a risk that an artisan may encounter unforeseen hardships and you will not receive your money back. Artisans selected for the Artisan Loans program are actively selling on Novica, and we don’t believe they pose a default risk to lenders. In fact, artisans are so excited by this program that we believe they will be extremely incentivized to keep a perfect payment history in order to continue to access credit in the future.

We're not paying any interest on your loans and likewise, we are not charging our participating artisans any interest. By cutting out all the financial intermediaries we can lend directly to artisans and offer 0% interest loans to grow their businesses.

If we’re receiving 0% funds from customers and lenders, we feel we should charge 0% to our participating artisans. Our economic incentive is for each artisan to grow their business and be successful.

Because we are not charging interest to artisans, we also cannot pay interest to lenders. If you would like to earn a return on your microcredit investment, we would like to recommend Microplace.com, an excellent website with a mission to alleviate global poverty by enabling everyday people to make investments in the world's working poor.