P2P Lending (good web 2.0)

Also known as Person-to-person lending. Borrowers and lenders come together directly on the web and do not need banks. Thanks to Mo, I recently found out that that P2P lending is “working its way into the charitable sector: Kiva.org puts potential “social investors” in touch with small businesses in the developing world, which promise to send e-mail updates on how the business is developing.” Here is how it works (see this video presentation for more):

Taking small payments, usually $25, from a bunch of Kiva lenders raises the loans. Once a loan’s full amount has been raised it is transferred using PayPal to one of Kiva’s field partners. Field partners are local microfinance institutions (MFIs) in developing countries that find, track and manage entrepreneurs and then disburse and collect the microloans. When loans have been repaid in full they are transferred back to Kiva and then to Kiva lenders via PayPal.

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