Microlending in America
An ambitious social experiment will launch later this year that will test Americans' ability and willingness not just to give, but to give to one another.
An ambitious social experiment will launch later this year that will test Americans’ ability and willingness not just to give, but to give to one another. Kiva, an online micro-lender that has so far worked only in developing nations, will be launching here in the U.S. Americans have been more than willing to give small loans to businesses in Africa and South America. But will they loan to one another? To help answer that question,
There is the questions of whether or not the laws and motivations that have people donating overseas will work down the street. Premal Shah, the president of Kiva, says, "I think entrepreneurship is everywhere, and there is microfinance here, today, in the U.S. We think that on the website people will want to fund a hot dog vendor or a shoe shiner, or someone who wants to start up a daycare business."
Shah cites the repayment rates in the 90 percent range as evidence that this is something that people will be encouraged to support. The difference will be in the loan sizes themselves; the work that Kiva has done around the world in the sub-$100 range has proven to be quite effective for the recipeints. That amount can go a long way, depending upon the location of the borrower. In the U.S., the amounts will need to be in the $5,000-$7,000 range to be effective.
Shah also contends that microlending is essentially an American, capitalist way of doing business. "That's a very American notion: the idea of giving someone a little bit of seed capital, over charity, often times, to help them create income for themselves and theiir families."
"The Takeaway" is a national morning news program, delivering the news and analysis you need to catch up, start your day, and prepare for what’s ahead. The show is a co-production of WNYC and PRI, in editorial collaboration with the BBC, The New York Times Radio, and WGBH.