MICROFINANCE
(Posted 2010-02-04 20:38:25 by ArchPaladin)

In looking to start a private practice at some point in the future, I have
been looking for ways to obtain the necessary capital to do this.  The
obvious course is a small business loan, but of course I wonder if there
are ways to do better.

One method that I've found interesting - although not a replacement for a
loan - is microfinance.  The idea of microfinance is to try and cut out a
lot of the middlemen between the lenders and receivers.  A group of people
(the lenders) each donate a small amount of money and provide it to someone
they know (the receiver), who will make repayments to a central location
that the lenders have set up to be their go-to point for obtaining their
reimbursements.  That central location is responsible for account
management and rectification with the lender.

This of course sounds very much like how a bank lends money.  I think the
difference between a bank or credit union and microfinance is (a) the
"local" element, in that everyone knows each other and can benefit their
local community, and (b) that this generally a means of loaning out a small
amount of money, probably no more than $10-12K.

I find this to be a useful concept.  As a local community promoter, I think
this would be interesting to see more of in practice as opposed to the use
of banks.  I would be interested to use this for my own practice, depending
on what kinds of startup money I needed.

Some microfinance sites, for the interested:
Prosper [ http://www.prosper.com/ ] [prosper.com]
Kiva [ http://www.kiva.org/ ] [kiva.org]

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