eBay’s MicroPlace Making a difference with Microfinance

Microfinance, making small loans, gained tremendous recognition when microcredit pioneer Muhammad Yunus earned a 2006 Nobel Peace Prize for his initiatives at Grameen Bank. Now, thanks to an initiative at eBay, individual investors can also help fight global poverty.

A former Grameen Bank employee named Tracey Pettengill Turner has teamed up with eBay to create MicroPlace, a website dedicated to connecting investors with borrowers around the world.

How it works:

You purchase investments on MicroPlace from security issuers, who are responsible for making interest and principal payments to you. Security issuers use your funds to support loans to lending organizations, who then use those funds to provide loans to borrowers. As loans are repaid, security issuers are able to provide you with a financial return. Borrowers use their loans to start or expand small businesses. Profits from these businesses help them repay their loans, send their children to school, and improve their families’ living conditions.

According to SocialFunds.com, “Microfinance is the offering of very small loans, typically ranging from $25 to $500, to people in developing markets to grow their businesses. MFIs usually operate in areas that don’t have access to traditional banking services. The repayment rate for microfinance loans is extremely high.”

More at MicroPlace: Microfinance for the Masses

Via SRI