Wokai Blog: With Squeeze on Credit, Microlending Blossoms: Wokai China Microfinance Blog

Interesting article on New York Times yesterday about the emergence of microlending to small businesses in the US. Led by Opportunity Fund, a local microlender that has teamed up with Kiva.org to introduce a pilot program lending to business owners in the United States.

"Before the economic collapse, microfinance — the granting of very small loans, mostly to poor people — was a concept most closely associated with the developing world. But tight credit and the recession have increased the demand for smaller loans in the United States, giving microlending a higher profile and broadening its appeal. Both Kiva and Grameen Bank...have widened their lending to Americans.

Overseas, Kiva borrowers can seek loans of up to $3,000, while in the United States, borrowers can take out loans of as much as $10,000. Since its American debut, Kiva has helped lend $900,000 to 137 American companies. The average American loan is about $5,600 and has a term of about two years and three months.

“People are compelled to do something in their backyard,” said Gina Harman, president and chief executive of Accion USA, a microlender and partner in Kiva’s American pilot program. “Suddenly, giving $1 to someone in Ghana isn’t as important as giving to someone here.”

We see a similar emergence of microfinancing for small businesses in China. See The Alibaba Group Pioneers E-Commerce Microcredit Company in China. Our hope is that greater understanding of microfinance in urban China will draw awareness to and aid the progression of rural microfinance here.