Micro-Finance Makes Its Way Online

Over the past months more and more micro-lending solutions have been popping up online, displaying the internet’s potential as a charitable medium, enabling people to lend small amounts of money, which provide loans to those in developing countries empowering them to lift themselves out of poverty.

Among these online tools we find Kiva, Prosper, Zopa, GlobeFunder and eBay’s newly launched MicroPlace.

Kiva is one of the most successful stories among these up to now; In just 2 years, the site has funded nearly 17,000 loans to entrepreneurs in developing countries, recently reaching a total amount of loans of over $11 million.

The system is rather simple: Small entrepreneurs from the developing world go on the site and ask for a small loan to help get their businesses off the ground, then other people get to choose among these entrepreneurs and loan them small sums of money, as little as $25 for example, and when a loan is funded the money is passed on the entrepreneur by a local partner who follows up and reports back on the progress made by the entrepreneur, who starts paying back his loan once things get rolling on his side.

Simple, clear, and has the ability to help so many people in the developing world, which is great.

Some of these solutions charge some interest on their loans while others don’t. In some the money given is more of a mini-investment that the lender makes money on while in others it’s just a simple loan.

Personally, I think these solutions are a great way for people to get involved with helping people in the developing world pull themselves out of poverty and build better businesses and lives for themselves. They show that everyone one of us can make a change and play a bigger role by loaning a small amount of money, that might not mean much to us, but would mean the world to someone else.

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