Microlending is now the buzz word in America when it comes to giving loans to entrepreneurs. Kiva and Grameen Bank, two microfinance groups are well known for the support that they provide to small businesses operating in America and abroad. Kiva, an international microlender, has already lent $150 million in 53 countries. Grameen Bank, that has its foundation in Bangladesh, has lent $9.4 billion through over 2,500 of its branches worldwide.Branding itself as Grameen America the bank has opened one branch in Omaha and four new branches in New York.
Microfinancing works with a mission to alleviate poverty and not just to make a profit. Microlenders see the passion and commitment of applicants toward their businesses. So, they insist loan recipients to attend workshops on marketing, business plans and money management to ensure their success. Grameen also makes it mandatory for its borrowers to become a member of an entrepreneur’s group that conduct meetings every week. It also makes it compulsory for borrowers to save at least $2 from their weekly income.
Kiva has helped 137 American companies receive $900,000 in loans, since its American debut. Overseas the borrowers can get $3000 and in the US they can receive $ 10,000. There are many examples of such recipients. Ms Amanda Keppert, who runs Mandy’s Korner, a hot dog stand in San Jose, California, received a $6,500 loan from Kiva. Her sales plunged 60 percent and she is convinced that her business would have collapsed if she had not received a micro loan. Her loan carries a 6 percent interest rate and has three years payback time. The pilot program, Opportunity Fund, that Ms. Keppert attended is available in California and New York now. Premal Shah, President of Kiva says, “People talk about buying local — why not lend local? It’s a personal stimulus package if you’re the working poor.”
Mr. Craig Adams wanted $50,000 loan for opening a restaurant and event space. His long time bank turned him down on the pretext of his debt and then by a second bank. He finally received a $15,000 loan with 12 percent interest from ‘Justine Petersen’, a microfinance group having its base in St. Louis. Mr. Adams says “It’s not the greatest way to go, but it’s the only way to go.”
Kiva works like a middleman, and has teamed up with microfinance groups, maintains a website www.kiva.org, where individual entrepreneurs’ profile and loan requests are uploaded. People then can lend money through a microlender to an entrepreneur.
Grameen Bank plans to open offices in Washington, Boston, San Francisco and Charlotte. N.C. Grameen, helps people below the poverty line with first time loans of $1,500 having an interest rate of about 15 percent.
Biz2Credit has partnered with many microlenders as well, including ACCION and Seedco Financial to provide business owners in our network access to micro loans.
This article was submitted by Rohit Arora, co-founder of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to