Microfinance, macro possibilities

International micro finance is getting big by going small. The Wall Street Journal published a report this week saying that as many as 10,000 microlenders are serving 100 million small borrowers. The reason isn't altogether altruistic. Default rates on these loans runs at around 3% compared to 5% on U.S. credit card debt, making them attractive to large financial institutions, like Citgroup, which are making capital available to microlenders. Businesses like Indian lender SKS Microfinance Pvt. Ltd. - profiled in the Journal - have a solid and growing business.

Thanks to the Internet, individuals can also loan as little as $25 to qualified low income entrepreneurs through Kiva, a person-to-person microfinance web application that can make lenders out of anyone. Speaking of the site, CNN Money said "If you've got 25 bucks, a PC and a PayPal account, you've now got the wherewithal to be an international financier."


Technorati: microfinance