Levels of response are used throughout the world.

From government threat levels to

levels of disciplinary action, levels of response are employed everywhere in order to
demonstrate a control of restraint and caution. From the birth of the Microfinance
idea, the method through which a majority of institutions have acted was through a
one glove fits all response. The problem with this approach is that, while
conditional to the specific case of each individual, the system does not put into
perspective the overall compatibility of the community with the methods used by
microfinance. Thus, in order to better coordinate with a communitys overall
economic situation, microfinance institutions must employ their own levels of
response.

Late in the 1960s, President Kennedy enforced his own interpretation of levels of
response to the war in Vietnam. This plan allotted to developing an array of military
options that could be precisely matched to the gravity of the crisis at hand.
Although the U.S. eventually lost the war to Vietnam, Microfinance institutions must
employ their own form of flexible response to the economic situation of borrowers
throughout the world. With strikingly similar approaches of aid to the regions of Haiti
and Chile, two nations recently affected by catastrophic natural disasters, the rate of
growth within the countries has remained relatively the same as compared to the
economic growth within third world countries in Europe, Asia and Africa, thus
invalidating the hyped efficiency of microfinance on struggling communities.

In order to best assess and confront economic failure, three levels of response should
be employed.

Levels of Response:
1. Level 1 Prosperous Environment

This level is characterized primarily by a fairly successful environment, where the

majority of the population lives above the poverty line, and the general collective is
not experiencing large flux in markets, jobs or other business factors (decrease in
pop., natural resources, etc). In this type of environment, borrowers are merely
looking to expand their businesses, and improve the success that they are already
experiencing.

2. Level 2 Neutrality Incarnate

The environment in this type of community is most similar to that of the self-
sustaining societies which support themselves largely on subsistence farming and
trade. Borrowers should be advised on how to look outside of their community and
trade outside of the previous boundaries, expanding economic potential for range
and profit.

3. Level 3 Emergency Environment

Here, a major catastrophe or event has devastated a locale, causing a majority of the
residents to face immediate problems with acquiring food, water, clothing or shelter.

Approaches to confront these three levels are as follows:

For level 1 environments, the major priority that should take precedent before any
other objective is that borrowers must become as well suited to the regular financial
practices of the modern world. Meaning that borrowers should face similar interest
rates and time periods. Since many of these businesses have already been
established in a community, the element of sustainability has already been
attained. What is most important, is that these business owners receive the stimulus
needed to boost them out of a struggling situation, into a lifestyle of relative
opportunity for success.

The main focus for level 2 environments is achieving the single most central element
of Microfinance: sustainability. The businesses categorized within this section have
not yet developed enough to the point that if allowed to exist autonomously, would
be able to maintain themselves financially. Therefore, interest rates would range
from moderately high, to relatively low (within the 10%-15% range).
Of course, the final level that must be addressed is the emergency environment. As
an environment completely incapable of producing profit, or achieving any form of
sustainability, loans would be given out, primarily, to business owners who were once
at a level 2 scenario. The most difficult situations of the three, these loans would not
require any repayment at all, and would simply aim to get the general community
back on its feet.

For the loaning organization itself, the majority of the loans that it would give out
would come from the level 2 environment, as the minorities are found in the level 3
and 1 areas. Loans for environments in level 3 areas would be backed by online
contributors, therefore allowing the organization to lend without sustaining any
losses from the transaction.

This method, in its ability to react accordingly to the situation of any society, will help
to alleviate poverty much faster than at the present pace. The system will call upon
the amount of need necessary to confront any situation, and will allow communities
worldwide to slowly integrate into a more balanced and comfortable lifestyle.