Microfinance for Small Business
March 19, 2009

Tough economic times open gates for micro financing and online lenders.

The World Bank estimates that there are over 7000 microfinance institutions that are serving over 16 million poor people in developing nations. The total cash turnover is estimated at $2.5 billion in US currency. As per the latest Microcredit summit, the total cash need to help over 100 million poor the world is over US $21.6 billion. The repayment rate is 97% much which is better than any commercial bank loans.


ACCION USA is part of the U.S. ACCION Network, the largest domestic micro lending network, with over $230 million lent since its inception in 1991. It is committed to bringing affordable microfinance solutions to small business owners who need them. ACCION USA is a private, nonprofit organization that provides microloans and other financial services to low- and moderate-income entrepreneurs who are unable to access bank credit for their small businesses. With economic opportunity, these entrepreneurs–often minorities and women – can build assets, better provide for their families, and strengthen their communities. It offers flexible loans (up to $50,000) for small business. To learn more click here.

Kiva.org is the world’s first person-to-person (P2P) micro-lending website, empowering individuals to lend directly to unique entrepreneurs in the developing worlds. The mission for Kiva.org is to connect people through lending for the sake of alleviating poverty. It has over 27,000 lenders and provided loans about $27 million to small businesses in over 40 countries. Kiva has partnered with Advanta the small business credit card issuer to create a KivaB4B.org. Click here to visit Kiva’s website.

Microplace’s mission is to help alleviate global poverty by enabling everyday people to make investments in the world’s working poor. It is a social business. The minimum amount to invest is $20. The return on investment is around 5%. It is an eBay company. Get more details click here.

LendingClub is a P2P micro-lending club. It is more of a social lending network that lets borrower members borrow money through personal loans, and lenders fund these loans by investing in Notes. Each Note corresponds to a portion of a borrower loan. A recent review of this social lending network shows that it had facilitated $23.6 million in loans during the June 2007 to December 2008 time period. The average return for the lender was 9.05 percent with a median return of 10.48 percent based on weighted average return on invested capital. To learn more click here.

Prosper.com is another peer-to-peer lending site. At the time of the writing this report, Propser.com is not active as it has received a cease and desist note from the SEC. It was launched in 2006 and claims to have 830,000 members with over $178 million in loan facilitation. They offered loans up to $25000. Their website. ZOPA USA is a marketplace where people lend and borrow money to and from each other, sidestepping the banks. This is also a social lending organization, started in UK and currently not active in US. The average return for the investors was 9.1%.

Count Me In is an online micro-creditor offering fixed-rate loans of $500 to $10,000 at 2 points above prime with terms of 12 months to 84 months. The loans are aimed at women-owned startup businesses. Count Me In. There are other organizations like FINCA (thevillagebanking.org), the coalition of community development financial institutions (cdfi.org), the Opportunity Finance Network (opportunityfinance.net), OBDC Small business finance focusing on local community business loans (obdc.com), America One (americaoneunsecured.com), etc. are involved in either P2P, social, community or unsecured business loans.

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