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| Saturday, July 22, 2006 |
| Microlending |
A number of pfbloggers have been experimenting with microlending using Prosper.com. While some have had great results so far, others have not been so lucky. BusinessWeek's article: A Little Money Goes A Long Way mentions another site similar to Prosper called Zopa.com.
But what really caught my attention was the microlending site called Kiva.org. Unlike Prosper or Zopa, you are lending to someone in a developing nation - hopefully helping them lift themselves out of poverty.
While I have yet to join and lend on any of these sites, if I was I think I would first explore Kiva.org. There is something about helping an African widow purchase a milking cow that appeals more than lending to someone seeking to consolidate credit card debt. If I was going to get burnt on a loan I would rather know that my money went to help feed someone's children. While lending to the credit card consolidator might make better financial sense (higher interest rate paid to me the lender), lending to the struggling single-Mom has more appeal, at least for me. |
| posted by Boston Gal @ 10:15 AM *
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| 9 Comments: |
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I've been using Prosper since close to its inception, and I would count myself among the lucky ones. My account value's gone up 5.5% thus far, and there hasn't been a default yet.
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I agree-- I hadn't heard of Kiva but now I'm intrigued. I've heard so many inspiring stories about the good that microcredit can do in developing countries...
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I'm going to look into Kiva.org. I like the concept.
BTW, I'm a struggling single mom. Can I borrow $20?
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Single Ma,
Of course you can borrow $20, but you have to agree to use the $20 to buy a milking cow ;)
Interest can be paid in the form of freshly churned butter...
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I've been one of those readers lending on Prosper.com. It does get quite addictive.
I like the idea of Kiva.org, but I would think of that as my charity giving. Prosper is much the eqivalent of a longer term CD in my portfolio.
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Thanks for mentioning kiva.com. I hadn't heard of it, but it sounds very interesting. Like you, I'd rather help someone feed their family than to help someone pay off credit card debt. And if they default on the loan at kiva, I'll think of it as giving to charity.
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Jane,
I'd like to check out Kiva, it sounds interesting - I'd be curious about the default rate and collections recourse.
I'm about to have my first default though I expect I should still make some good money this year at prosper.
I heave zopa automatically puts you into a loan syndicate - am not sure how it works, but need to check it out.
have a great weekend,
makingourway
www.makingourwayblog.com
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Makingyourway -
Kiva has had a 100% repayment rate so far (no defaults). Microfinance in the developing world in general has a much higher repayment rate than loans in the US (97% on average).
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Hi guys,
Dave from Zopa here. Just thought I'd mention that although we can't compete in the lending money to Africa farmers stakes, we are moving beyond lending only based on a credit grade, and opening up affinity groups on Zopa UK.
One example is the Notting Hill Housing Trust where we're working with them to provide loans to their tenents at rates far below what they would normally expect to pay from Payday loan companies and the like.
I think (Like Lazy man) that many people will see Kiva as quite distinct Prosper and Zopa. Certainly at the moment, if you want to earn interest on your capital, you need to lend through either ourselves in the UK (and very soon the US too) or Prosper in the US.
Just quickly - makingourway - yes, at Zopa you don't choose individual borrowers in the way that Prosper works, but you choose a group of borrowers and your money is automatically spread across at least 50 borrowers of the type you specify. We also carry out extensive credit assessment behind the scenes - which means after almost 18 months of operation in the UK we have bad debts of less than 0.1%.
Any questions - feel free to send them to dave [at] zopa [dot] com
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I've been using Prosper since close to its inception, and I would count myself among the lucky ones. My account value's gone up 5.5% thus far, and there hasn't been a default yet.