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Microfinance is Becoming Big Business in the United States
Published on Aug 3, 2010
Read 'Microfinance is Becoming Big Business in the United States' at 'Time to Start Up,' the small business blog by BizFilings.
What was once only associated with developing countries in the Third World is now growing a presence in the United States. According to the New York Times, microfinance - the granting of very small loans - was limited to poor people.
The surge in microlending within the United States can be linked to belt tightening on credit lines. Many have turned to microlenders such as Kiva.org, which the New York Times cited as having lent more than $150 million in 53 countries. Kiva has just begun a pilot program lending to business owners on U.S. soil and has already helped lend $900,000 to 137 American companies.
Kiva's website offers helpful information to entrepreneurs and small business owners interested in microloans and finding money to start or grow a business. Kiva partners with worldwide existing microfinance institutions coined as "field partners." These field partners do all the leg work required to get Kiva loans to the entrepreneurs posted on Kiva's website. Microfinance groups post these profiles of entrepreneurs and their loan requests. People browse through these profiles and then decide which ones they would like to lend money to.
Kiva operates much like a middleman, disbursing the money through the microlender. When a business owner repays the loan, that's when the individual lenders get their money back.
In the United States, borrowers can take out loans adding up to as much as $10,000.
Since its debut in the United States, have any of you used the Kiva program? Do you think it is a feasible solution for small business owners looking for smaller loans? If so, why?