Transcript for the Piece Audio version of Microfinance in the US gets a boost

INTRO: Microfinance is a big focus in the international development world. It’s the process of getting small loans and financial services to the poor and underserved. And there are now a number of websites that help Internet users fund entrepreneurs from Kenya to Cambodia. Now, one of the biggest, Kiva.org, will allow users to make microloans to small business owners in the United States. Rachel Dornhelm reports.

TEXT: In January, Vika Sinipata fulfilled a long time dream. She opened her own business. Assisting the elderly.

Sinipata 1 “Usually in the afternoon I just make her tea.” [SFX OF STARTING WATER, fade under]

TEXT: On this day, she is at a client’s house, near San Francisco.

Sinipata 1a “And then I make her sandwiches” [fade under]

TEXT: Sinipata got the idea for the business after taking care of her own relatives. What she couldn’t get was a line of credit.

Sinipata 2 “I‘ve tried the route through the bank and they want 2 years of experience, and especially for myself, I didn’t really have much foundation in the way of experience other than my MBA and my background in sales and it wasn’t enough.” [13]

TEXT: So she used her savings of $5000 to launch her business. In March, she realized she needed another $10,000 for a license from the state and more marketing materials. And that’s how she became part of an experiment on the microlending website Kiva.org.

Kiva is a non-profit organization that allows individuals to lend to entrepreneurs around the world -- in 25 dollar increments. Until today all of its borrowers were in developing countries.

Shah 1 The economy and the credit crisis was a big motivator for Kiva looking at the United States and realizing that, wow, there is quite a need for capital, domestically. [10]

TEXT: Premal Shah is president of Kiva.

Shah 2 [TAKE OUT STUMBLE] So someone in NY who wants to start a salon, or someone here in the Bay Area that might want to start day care. [09]

TEXT: Microcredit has been available in the United States for two decades, but it gets less attention here than in the rest of the world. The average loan to an entrepreneur in the U.S. is $7,000, compared to a few hundred abroad. And relative need may be perceived differently, too.

Shah 3 “I really don’t know if people are going to say, ‘hey, my $25 goes farther in Southern Sudan or Cambodia than in Queens, NY.’ It will be really interesting to watch.” [12]

TEXT: Shah says Kiva users do show strong preferences, and funding rates vary depending on the borrower’s gender and geography.

Shah 4 “For example an African woman, excuse me a Kenyan woman farmer gets funded 10.2 times faster than a male Bulgarian taxi driver.” [08]

TEXT: To test the waters, Shah invited two U.S. microfinance institutions - ACCION USA and Opportunity Fund – to include their entrepreneurs’ profiles on Kiva’s website. Vika Sinipata’s business proposal was posted by Opportunity Fund. Its CEO, Eric Weaver, says after the U.S. credit markets stopped lending so freely, his company has seen more interest in microloans.

Weaver “We’re seeing more people come to us who previously were bankable, you know they had their line of credit frozen, or their term loan was not renewed, they weren’t able to increase the credit they’re getting from the bank.” [12]

TEXT: So would current Kiva users be interested in the new U.S. option? The Reverend David Taylor, in Greenville, South Carolina, says yes. His Eastminster Presbyterian Church has contributed to about 200 Kiva microentrepreneurs in the last few years.

Taylor 1 “In fact I think people have gotten excited and have continued to do loans on their own that we haven’t even tracked.” [08]

Their money has gone everywhere from Tajikistan to Uganda. But he expects his congregants will be interested in the new US option.

Taylor 2 “Actually on our outreach team we’ve had conversations about how to do a Kiva-like loan to people in the community.”

TEXT: Reverend Taylor says his congregation would probably be most interested in funding entrepreneurs from their own southeastern U.S. region. People around the country may soon have that option. If all goes well, Kiva plans to team up with other U.S. microfinance organizations.

I’m Rachel Dornhelm in San Francisco.

Back