Kiva, an online person-to-person micro-lending outfit that enables people to make loans to entrepreneurs and small businesses in the developing world, is opening up to credit crunch-hit American borrowers.
Since its launch three and a half years ago, over $75 million has been loaned through Kiva to more than 180,000 individuals from 44 developing countries.
It is now teaming with microfinance institutions Accion USA and Opportunity Fund to enable people to make loans to American businesses, 10 million of which have faced difficulty getting capital during the credit crisis.
A loan of $25 or more can be made to support a US entrepreneur, and the specific progress of the money can be tracked, from initial funding to repayment. Upon receiving repayment, lenders can withdraw their funds or relend to another entrepreneur.
"Most people think of microfinance as something that helps people in the developing world alone, but the impact of microfinance can be felt in any community that supports creative, industrious entrepreneurs," says Premal Shah, president, Kiva. "Kiva's micro-loan model is extremely relevant to low-to-moderate income, US based entrepreneurs, especially given the current economic conditions which makes access to credit a very real problem. The Internet could become a significant source of community driven, low-cost capital for the everyday small business owner in the US."
P2P lending in the US has run into difficulty recently, with outfits like Prosper forced to stop accepting loans and register with the Securities and Exchange Commission.
However, Kiva loans are made at zero per cent interest, which means it is not offering a security, leading Shah to tell TechCrunch that SEC registration is not necessary.