Funding New Business Ideas- Take a Look at Microlending

Here in the United States, microlending is still a new idea, but it can be a wonderful way to fund a small business start up. If you have been thinking about starting your own business, but need some help financing a small amount of capital, microlending may be the answer. Microlending is the term that refers to borrowing a small amount of money in order to invest in a business. Historically, banks issue loans for large amounts and require a great deal of security on their loans which can be a problem for many people who are just starting out. By using a micolending site like Kiva, people can post their business idea and their desired loan amount, (the average is $375) then other visitors to the site can lend money in as little as $25 increments. When your loan totals reach your goal amount, Kiva will issue the loan and you will have a repayment period.

Kiva and other micolending sites have been working in developing countries for years and have been making a huge difference for the people that use the service. It works like this, a woman in a developing country has a cow and sells milk around her town or village. She wants to expand her business by purchasing an additional cow, but can't yet afford the $100 for it. By getting a microloan, she can purchase the extra cow and will start doubling her income. After she has re-payed the loan, she can repeat the process. The idea is that if she is given the small amount of help that she needs, she can grow her business and that stimulates the economy in her town or village. It is a great lending model, and unlike traditional loans, Kiva boasts a repayment rate of 98%.

Last year, Kiva extended service to the United States, allowing small businesses and entrepreneurs to receive these small loans. And with banks even more hesitant than ever to hand out credit, for many, this is a blessing. By recognizing that the path out of poverty and into a successful business is often the difference of just a few hundred dollars, sites like Kiva have been changing the face of charity. Anyone can visit the site, find a cause they can support, and then send as little as $25 to help that person reach their goal. Because it is a loan, the benefactor does get their money back when the loan is re-payed. So whether you are looking for a way to help or need a little help, microlending in the United States is a great idea.

By Melissa Kennedy- Melissa is a freelance writer and regular contributor to several websites and other publications, a volunteer, a full time mom and an active job seeker.