More Microlending Comes to the US

(Kiva borrower Amato Loma-Yindja, of Village D'Afrique day care)

Several weeks ago, I wrote about Bentley College students launching a microloan program for U.S. entrepreneurs.  The competition just got more fierce.  Kiva, the well-known internet-based microloan program targeting developing country entrepreneurs, is expanding to the U.S.  Kiva, based in San Francisco, cites the economic downturn as preventing thousands of domestic small businesses from accessing bank loans.  But as I wrote weeks ago, there have always been small and micro- enterprises in this country that lack access to traditional credit.  Recession or not, it's exciting that Kiva is bringing its business model home.  Beyond the individual economic benefit of small business lending, a less tangible sense of reciprocity goes a long way towards poverty alleviation.

In my prior post, I wrote about the individualistic anti-poverty prospects of microlending.  One way to expand the opportunity for poverty reduction is to cluster the loans geographically.  Kiva has targeted 18 entrepreneurs in Bay Area and 18 in NYC, and though these entrepreneurs may not be proximate to one another, concentrating investments in specific places can have an exponential effect.  One reason Kiva has chosen these two metro regions is because they worked with Opportunity Fund in San Jose and Accion USA in NY to identify potential entrepreneurs - joining a network of small business lenders and loan recipients.

This points to another anti-poverty spillover effect that's important here but less tangible is the sense of reciprocity and community generated in Kiva's model: it's "person-to-person economic stimulus plan."  In the link prior to this one, Bay Area recipients were previously lenders.  No interest is made on Kiva loans, thus encouraging participation from those more interested in charity and giving back.  This personalized, reciprocal model appears to create a sort of "pay it forward" spirit, which spurs on-going activist momentum, I hope.

Here are some heartwarming examples of Kiva loan recipients in the U.S.  Let us know if you've given a Kiva loan in the past, and what your expectations are for their person-to-person model here in the U.S.