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This YouTube video balances the pros and cons of microloans.
http://www.youtube.com/watch?v=J4wxo5IHpT0
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March 17th, 2008 James Surowiecki wrote on The Finacial Page of The New Yorker,
"There’s no doubt that microfinance does a tremendous amount of good, yet there are also real limits to what it can accomplish. Microloans make poor borrowers better off. But, on their own, they often don’t do much to make poor countries richer...This isn’t because microloans don’t work; it’s because of how they work. The idealized view of microfinance is that budding entrepreneurs use the loans to start and grow businesses—expanding operations, boosting inventory, and so on. The reality is more complicated... most microbusinesses aren’t looking to take on more workers. The vast majority have only one paid employee: the owner. As the economist Jonathan Morduch has put it, microfinance 'rarely generates new jobs for others.'...What poor countries need most, then, is not more microbusinesses. They need more small-to-medium-sized enterprises, the kind that are bigger than a fruit stand but smaller than a Fortune 1000 corporation. In high-income countries, these companies create more than sixty per cent of all jobs, but in the developing world they’re relatively rare, thanks to a lack of institutions able to provide them with the capital they need."
For the full article click the link below: (http://www.newyorker.com/talk/financial/2008/03/17/080317ta_talk_surowiecki)
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A really great resource to find out more about microfinance is the Kiva website. Kiva is one of the best well known microloan sites. San Francisco based Kiva was developed in 2005 and has since then lent more than $11 million in microloans, as reported by Josh Catone on ReadWriteWeb "Kiva.org has now funded almost 17,000 loans by over 110,000 lenders. The average size of each loan is $649.63 and the repayment rate is a very impressive 99.59%."
The link below connects to Josh Catone's article "Kiva.Org Crosses $11 Million in Microloans to Developing Nations": (http://www.readwriteweb.com/archives/kiva_11_million_in_loans_to_developing_nations.php)
The link below connects to the FAQ page:
http://www.kiva.org/about/microfinance/
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The next few posts will focus more on different organizations, such as Kiva and other less well known organizations including Namaste Direct and Finca.
