Green Microfinance and the Circular Economy: Frugal Models for Sustainable Community Enterprises

Abstract

Abstract- This study analyzes the application of frugal financial models in sustainable community-based recycling and reuse ventures in Colombia and Peru. Using the case method, it examines specific experiences—Recicla y Transforma, Reciclaje Comunitaria, Fui Un Banner (FUB), and Sinba—highlighting circular economy practices, green microfinance strategies, and their economic and environmental impact. Findings show that these models prioritize resource efficiency, social inclusion, and low reliance on external capital. Funding strategies include utility reinvestment, community funds, public-private partnerships, and crowdfunding. Circular practices include waste revalorization, artisanal production, and community-led composting. The economic impact is seen in sustainable income generation, job creation, and financial autonomy. Environmentally, these models reduce waste and emissions. Comparing cases reveals key facilitators such as local networks, social innovation, and institutional support—as well as constraints like limited scale, policy dependency, and lack of formalization. This research contributes both to academic knowledge and to the design of inclusive, sustainable public policies in the Andean Region. Keywords: Green Microfinance, Circular Economy, Frugal Models, and Sustainable Community Entrepreneurship