You know about Kiva.org from my blog posts here… it lets folks with a PayPal account lend money to entrepreneurs world wide. My only problem now is that I’ve had a loan repaid and I can’t find any entrepreneurs from the microlenders I’ve chosen to work with. I thought that was because my chosen lenders were probably focusing on the best candidates to promote through Kiva so that there are not lots of complaints. I think they want strong candidates, but in reality Oprah mentioned Kiva so that’s why I hear there aren’t new candidates to fund!
But now Ebay is getting into the microfinance world as reported in Spiegel Online through it’s new MicroPlace program.
Lenders can lend as little as $100 ($25 at Kiva) to an aspiring entrepreneur to help lift them out of poverty. Unlike Kiva, investors through Micro Place stand to earn some interest of 1% to 4% this initial report says (at Kiva, you just get a warm feeling) though the partners do receive interest which keeps them alive and being able to be partners.
Here’s a sobering disclaimer:
MicroPlace cannot guarantee that lenders will make back their principal, much less the interest, but microlending experts say recipients of microloans have a solid track record on repayment. And MicroPlace is working with organizations on the ground in impoverished areas to identify loan candidates who have the potential to start businesses capable of changing family fortunes and creating new employment opportunities in their communities. The site works with the Calvert Foundation, a nonproft that has worked in community investment for 10 years, and microfinancier Oikocredit, which funds nearly 500 projects, ranging from a cassava processing plant in Ghana to small loans to entreprenuers in Bolivia. As the site grows, it plans to expand its partners.
I had two loans go bad due to poor on the ground management by the partner agency. They were completely refunded in part, I think, because they were made by someone (me) expecting no financial gain, just the return of my money. There will be less incentive (i.e. none) to “make good” on these “at interest” loans. At 1% to 4% interest you are possibly keeping up with inflation, but then you have taxes involved and I have to wonder if it’s any advantage to lend at this small interest rate.
That will be your choice!
Here’s their site for this venture: Microplace.com