One of my first posts on Merge was about microfinancing or “peer-to-peer” lending and Kiva Microlending, one of the highest profile players in this industry (Microfinancing. A Model That Can Work for Designers? March 28, 2009). Surprisingly, that post is one of the most highly searched topics on the blog—so when I came across an article about Kiva in Business Week’s SmallBiz bimonthly, it seemed like a good time for a follow up.
Kiva, a non-profit which is known for their innovative approach to facilitating loans to entrepreneurs in the developing world, is making news again because they have now created an operation here in the U.S. for domestic entrepreneurs. U.S. loans will not exceed $10,000 and the total value of U.S. loans will be capped at $800,000. Despite loaning to the smallest of businesses in the remotest of locales (a cobbler in Mongolia was featured on their homepage as I was writing this), Kiva has had remarkable success with their international lending operation, with more than $80 million loaned and a stunning repayment rate of 98.5%.
Of course, there are many other players in this growing field. Prosper is the largest U.S. peer-to-peer lender and Accion and Opportunity Fund are also prominent operations. Ironically, in the same issue of SmallBiz, there are a couple articles about the gloomy state of the traditional small business loaning process which has completely dried up in the last year. Despite efforts by the Small Business Administration to stimulate activity at this level, the recovery has been slow and sluggish. Hence, I see peer-to-peer lending as an encouraging trend for designers who are exploring ways to launch a new venture. If your new business vision has stalled out because ytou don’t have the cash for an initial run of products or prototypes, this could be an opportunity worth exploring.
Merge Workshop at Kane Mini-Camp
I will be presenting a workshop on Entrepreneurship for Creative Professionals at the Kane Consulting Summer Camps this Tuesday, August 18, 6:00PM at Aloft in downtown Minneapolis. Spots are still available.