Small loans can make big changes for poor.

Micro-credit is taking off in the Anglican Communion.

It's a simple idea that requires a small pot of money to begin with. Typically, a number of people in a developing country get together and apply for small business loans from the pot. Other members must approve the loans because if a member defaults, the group as a whole pays the outstanding amounts. The loans -- typically granted at low interest rates -- are generally used by individuals to start or grow small businesses.

One advantage of this type of assistance is that the cash used to start a small lending project remains in the developing country, rather than having to be paid back to the First World country.

The Primate's World Relief and Development Fund likes the micro-credit idea so much it gave $40,500 to the Ecumenical Church Loan Fund in response to an appeal to Anglicans in 1998. Research in 10 countries had shown that while Anglican churches and related groups had received moneys from the loan fund in the past, the fund had not received any financial assistance from the Anglican Communion.

The ecumenical loan fund was started in 1956 to help rebuild European church buildings destroyed during the war, says Bern Jagunos, Asia-Pacific global program associate for the Primate's Fund. The loan fund is associated with the World Council of Churches.

The loan fund expanded its mandate in the 1970s to include development activities of churches and community groups in the South. Micro-credit is a key part of its program, accounting for about a third of its loans. The international fund disperses money to national loan fund committees in each country and it is those committees that decide where the money is spent.

"Loans taken by churches and grassroots organizations are paid back in local currencies retained in the respective countries as revolving funds to benefit more and more people locally," Ms. Jagunos wrote in an article about the fund.

"The thrust of the PWRDF is to support local initiatives to satisfy people's basic needs and to develop their capacity to improve their lives," Ms. Jagunos said in an interview. "Micro-credit fits within that thrust."

In the meantime, another enterprise dedicated to micro-credit is starting up in the Communion itself. Anglican bishops in many developing countries have no shortage of souls but many of the people in their congregations are almost destitute. In response to their concerns, a resolution at the 1998 Lambeth Conference endorsed the micro-credit initiative Five Talents.

The Archbishop of Canterbury, George Carey, was the first donor to Five Talents with a gift of [pounds sterling] 1,000.

"We will be active at the grassroots level to make a difference in the lives of families who are among the poorest of the poor," says Craig Cole, the new executive director of Five Talents.

Five Talents -- named after Jesus' parable of the talents -- will implement three pilot programs in Uganda, India and Latin America with the assistance of Opportunity International, a Christian micro-credit agency with almost 30 years of expertise in the field.

The Trust Bank, a concept developed by Opportunity International, will be the initial method used. A trust bank brings together 15 to 40 borrowers from the community. About 85 percent of the borrowers are women. The trust bank is then divided into smaller groups of five to seven borrowers. They meet with a loan officer once a week to pay back a portion of the loan and receive more business training. If one of the borrowers can't pay back the loan, the rest of the group is responsible for it. This "group-lending" method results in a 98 percent repayment rate.

One trust bank can be started for $10,000. The majority of businesses are in food production and sales, street vendors, brick manufacturing, shoe making, carpentry, auto repair, beauty salons, office services and tailoring.

"These will be Anglican projects," Mr. Cole said. "The beneficiaries won't all be Anglican, but the church will be able to gain from Opportunity's technical expertise with micro-loan programs."

According to Opportunity International, on average one job is created for every $199 lent. Each job supports about six people.

With files from David Virtue