Tuesday, October 26, 2010

Microlending in the USA

For years, social entrepreneurs in the U.S.  have applauded microlending programs as tools for wealth generation in poor countries.  The programs, generlly based on the model established by Muhammad Yunus and the Grameen Bank, provide small loans to entrepreneurs who ordinarily do not qualify for bank financing.  Until recently, microloan programs were confined primarily to the poorest nations.

Recently, the Community Development Law Clinic that I supervise in North Carolina has received requests from local groups wishing to form microloan programs in their communities.  And it appears that microloan programs' migration to the US is not confined to my home state.  The Wall Street Journalreported recently that Kiva, a nonprofit known for helping foreign entrepreneurs receive microloans, is beginning to do business along the U.S. Gulf Coast.  Kiva is the best known of the so-called "crowdfunding" organizations that act as a portal, matching donors who want to loan to microentrepreneurs with low income people who need capital to start businesses.



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There are two kinds of microlending practices that are very common nowadays in third world countries. There is individual lending and group lending. Just have to be sure that these clients undergo credit investigation and background investigations because these type of lending are based on character. Meaning they do not have any collateral and they are more risky than compared to other existing loans.

Posted by: Brad Fallon | Jan 19, 2011 7:18:27 AM

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