Microfinancing The Globe
Every morning, Imad Al Zayed, a 36-year-old father of three, fires up his blue minivan and hits the streets of Beirut’s Chyah district to sell fish. A picture on Kiva.org shows him posing behind the mobile fish market, a warm smile cracking through his short silver beard, and a basket of decapitated merchandise off to one side.

Al Zayed’s plan is to outfit the van with a freezer so he can stock more fish, putting him on the path towards someday opening a small shop. He requested a $1,200 loan for the upgrade through Kiva’s microlending program, offering no collateral and scant credit history, but in just hours it was secured. The Web site reports that Al Zayed is now 100 percent funded, through the pooled money of a dozen Californians, a financial planner from Australia, and one couple in Taipei.

Peer to peer lending isn’t anything new. Last time your kid "borrowed" $5, you were playing the part of a microlender. What has changed is the degree of formality that’s been brought to the industry in the last 30 years. By adding accountability, transparency, and increased connectedness through the Internet, the global microfinance market has mushroomed to an estimated $300 billion, growing more than 25 percent per year for the last decade.

We can thank Muhammad Yunus, PhD for the recent success. Winner of last year’s Nobel Peace Prize, the "banker for the poor" got his start in Bangladesh 30 years ago, when he was astounded to find that a simple loan of $27 allowed an entire village to escape the cycle of debt and poverty. Since then, he’s formalized his lending method into the Grameen Bank, which has lent over $6 billion to otherwise unbankable clients.

San Diego’s Foundation for Women follows Yunus’ recipe for success, offering micro-business loans to impoverished women worldwide — including 60 local clients. One San Diegan created an African import shop. Another started a jewelry business. A third braids hair with the goal of expanding her business into a full-blown salon.

Make no mistake, this is not charity — it’s venture capitalism on a microscopic scale. "Poor people know what to do to make money," says founder, Deborah Lindholm. "They get up in the morning and they know if they don’t create something, they’re not going to eat."

While Foundation for Women is a nonprofit (www.foundationforwomen.org), Lindholm does not discourage investors from pursuing commercial microfinance options that offer a modest return. "When you look at the 1.2 billion people who really need access to microcredit...it’s going to take more than philanthropic dollars to solve that problem."

Kiva.org, for example, only pays dividends in warm fuzzies, but you do get your money back once the loan matures. After 12 months abroad, your well-traveled dollars return to be re-loaned, or simply cashed-out and blown on lattes and lunch dates. The choice is yours. "The idea that you can make a loan to somebody and get that money back, but the business is still continuing...that’s very attractive to people," says Kiva’s spokesperson, Fiona Ramsey.

Investors seem to agree. In less than two years of existence, the organization has already facilitated $11 million in loans. The Web site offers gift certificates, so consider rerouting this year’s holiday cash through the developing world.

Of course, one can work microfinance for maximum profits, though for slightly less noble pursuits. Prosper.com lets you play Lil’ Loan Officer as you offer subprimes to more colorful characters than you’ll meet on a city bus. An eBay style interface guides potential lenders through the pictures and personal stories of each client.

Examples include a man in Georgia who wants three-thousand dollars to buy a big TV. An Elvis impersonator needs $18,000 for a new costume and marketing campaign. A college kid with a new-wave haircut is asking for $20,000 — to loan to other people. There are hundreds more.

Interest rates are a function of the client’s credit score — An AA will fetch you ten percent, whereas lending to a Highly Risky (HR), can cull a cool 24 percent. Of course, returns are a function of risk, so expect some loans to suffer setbacks as late payments trickle in, or worse, default.

Granted, with half the world’s population living on less than $2 a day, one man’s struggle to buy a bigger boob-tube isn’t quite as compelling as Al Zayed’s story. Maybe providing small entrepreneurs the means to succeed is return enough. When Al Zayed opens up that shop, he’s going to need employees, and they might save to open stores of their own. It’s a chain reaction of economic uplift.

Ramsey points to the old saying, "give a man a fish." "Well," she says, "these people know how to fish. They just need a net." Or, in Al Zayed’s case, a freezer. — Paul Stuart

Jack and Charlotte Hayes, Alice Reinig, and Norm Schoenfeld

Chairmen’s RoundTable Turns Ten
To celebrate a decade of helping small businesses in San Diego, The Chairmen’s RoundTable (CRT), a local nonprofit volunteer organization that provides gratis mentoring and business advice, held a private celebration. "The Chairmen’s RoundTable has provided an invaluable service to the local business community for the past ten years," Mayor Jerry Sanders told the press. "The successful CEOs who are members of this unique organization have contributed their time and expertise to mentor the leaders of more than 200 of our local companies as a way of sharing their collective experiences and giving back to their community. I applaud the Chairmen’s RoundTable for its ten years of valuable contributions and encourage its members to continue their efforts." Over the years, the CRT has generated many inspiring success stories, including Red Door Interactive, Techflow, and Profit Line, to name a few. "We are proud and honored to have worked with the many savvy local business leaders that have taken advantage of our mentorship program over the years," says Hus Tigli, chairman of the CRT. The CRT was founded in 1997; over the past decade, more than 75 current and former CEOs have served as mentors. (www.chairmensroundtable.com) — Alicia Garcia, photo by Orlanda Guiang