How microloans starting at $25 can help change the world

Learn where you can start lending small amounts of money to help others grow their businesses in the developing world.

By Yuki Hayashi

Minor downsides to microloans
How you get paid back
At the conclusion of the loan repayment, you’ll get your money back in the form of a PayPal credit. (Blow it on some shoes! Or, you could reinvest it in someone else’s project.)

Minor downsides
You don’t get a tax receipt
You won’t get a tax receipt since technically, this is a loan, not charity. Also, while the local field partner charges a modest interest rate, that’s not passed on to you. (Remember, the goal is developing local economies, and that includes local financial institutions.)

The recipient could default
If your loan recipient defaults, you’ve lost your money; however, this happens very rarely (applicants are screened on their credit history, the strength of their business plan, etc.). The default rate with Kiva.org, for instance, is a mere 0.2 per cent. You can reduce your risk by donating $25 to four people, as opposed to $100 for one person, if you’re worried.

All told, it’s a great option if you want to see the real people you are helping. (And your lender profile page is as fun to fill out as Facebook.)

Getting started with microcredits
Kiva.org is a very user-friendly site and the website this author has been using. But other well-regarded microcredit sites operating on similar principles include:

Grameenfoundation.org
Globalgiving.org

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