World-changing loans for less than a latte

    This time of year comes with a great deal of reflection. Sometimes that leads supporting charitable causes. For many it means considering means for self improvement or even making the world a better place. So what better time to think about microfinance?
    Put simply, microfinance describes financial services — including loans — to people who don’t have access to traditional banking services. That might be because the needed loan is too small an amount for banks to lend or because the banks’ interest rates are just too high for the entrepreneurs to pay back.
    Think about the prevalence of loans in a typical American’s life. Most people couldn’t pay for their college education or buy a car or start a business without access to loans. Thankfully, they’re readily available. And those are just the big ticket items.
    Smaller things, like an unexpected medical bill or car repair or emergency travel expenses are easily covered with a credit card. Even outside of formal loans, a support system often steps in to help in trying financial times. That might be a grandparent providing childcare so a parent can still work when there’s no school. It may be a guest bedroom during a time of transition so a costly hotel stay isn’t necessary.
    Life is much different for those who don’t have access to such resources. That’s where microfinance comes in.
    Nonprofits like Zidisha (www.zidisha.org) and Kiva (www.kiva.org) facilitate microlending. There’s no guarantee that loans will be repaid, so lenders give knowing that they may not see the money again. However, a microloan is not a donation. Borrowers are certainly expected to repay their loans, and the vast majority do. Kiva, for example, currently has a 96.9 percent repayment rate.
    Depending on the organization, lenders can find entrepreneurs to support practically anywhere in the world. Kiva is active in over 80 countries, including the United States. The smaller Zidisha, on the other hand, is focused in Burkina Faso, Ghana, Guinea, Haiti, Indonesia, Kenya, Mexico, Niger, Senegal and Zambia.
 

The full article is available in our e-Edition. Click here to subscribe.