Microfinance

I heard about microfinancing in the last six months to a year. Organizations set up shop in poor nations of the world and provide very small loans to people in order to help them start a business, go to school, etc.

By small we're talking $50, $1,000. Stuff like that. But they're loaning to people with no collateral and often no credit history. But the repayment rate is usually in the high 90% range.

They use peer groups--like co-signers, I guess--in place of collateral and credit history. And the desire to make good on the loans so as not to disappoint the group leads to tremendous repayment success.

I just caught a link to a story about one--Por Mujer--that operates in several South America countries. Por Mujer--For Women--provides small loans to women. Their average loan balance is $192 and the repayment rate is 99%.

The first time I heard about microfinancing groups, I believe they were operating in impoverished African countries.

I'm sure there's bad stuff about microfinancing, but I haven't read it yet. Still, I'll refrain from advocating. But go learn more if it tickles your fancy. And feel free to let me know what you find out, if anything.