A Web site known for helping entrepreneurs in developing countries has turned its sights on the United States.
Since 2005, Kiva.org has helped Internet users give microloans, or small loans of $25 or more, to business owners in nearly 50 impoverished countries. Now it's offering similar loans to struggling U.S. entrepreneurs.
Tannis Lee Harrison has owned a housekeeping business for three years, but she never thought she'd be a cleaner. The 47-year-old was desperate when her husband's notary work dried up.
She says she and her family were going to lose their house in East Palo Alto, Calif. So, she asked a friend for help finding odd jobs.
Once she found her niche in cleaning, Harrison says, the work poured in. She soon needed to hire an employee, buy heavy-duty vacuums and find extra storage.
She couldn't get a loan or a credit card, though. She'd emigrated from Canada and didn't have a credit history in the U.S. yet.
"I did try to get credit through places like Walmart," says Harrison. "I didn't get it from there; I didn't get it from the bank because my Social Security number is so young."
Ask And You May Receive
Then she heard about loans on the Kiva Web site. The site connects small business owners who need cash with Internet users who want to open their wallets.
Harrison asked for $2,000. Within a single day, a combination of nearly 80 people had fulfilled her request.
"It's another growth spurt for me — a very personal thing to me," Harrison says.
Microloans typically have low interest rates and easy payback terms. Harrison will pay hers off in $100 monthly installments.
Kiva just recently made these loans an option for U.S. borrowers.
Premal Shah, the president of Kiva, says the San Francisco-based organization thought it might help the economy in its own backyard.
"We know that small businesses are the cornerstone of the economy. It's a real growth driver of the U.S.," Shah says.
"Even before the credit crunch, small business loans were hard," he says. "Post credit crunch it's really, really hard. So, Kiva started thinking, 'Wow, we're allowing people in the developing world to request loans, why not un-crunch America and allow people here in the U.S. to request loans and see if the Internet community wants to fund them.'"
A small number of people who make loans on Kiva.org protested the decision, including Tom Behan, a retired marketing executive in Seattle.
"In shifting their emphasis or some direction toward the U.S., they began diverting their time, money and resources from the have-nots to the haves, and that really set poorly with me," he says.
Kiva's mission is to alleviate poverty, so Behan wants it to disregard the U.S. and other rich, developed countries.
"There are over 2 billion people in the world who live in extreme poverty," Behan says. Poverty is defined by the U.N. as trying to survive on less than $2 a day.
"It also means they don't have access to basic necessities that we have here in the U.S., like free education, free health care if you need it, and the services of thousands, maybe hundreds of thousands of religious and nonprofit groups that are dealing with every kind of need," Behan says.
Behan says he and other unhappy lenders are switching to a different organization.
That won't change Kiva's course, though.
The Web site has attracted more money since the U.S. loan program began, according to Shah. He says that's good for entrepreneurs all over the world.