The people living in developed countries can never realize the way poor and rural people live in third-world countries. Despite their economic and technological advancements, millions of people living in Asian and African countries still do not have access to clean water, electricity and sanitation. So you can always consider granting a micro loan amounting to few dollars to make a huge difference to the lived of third-world entrepreneurs and their families.
Despite being a small to medium sized loan, micro finance is effective in providing sustainable source of income and healthy living environment to millions of rural people. The advancement in communication technologies has further transformed the classic micro-lending model pioneered by Prof. Muhammad Yunus. Nowadays, a lender can choose the right peer-to-peer lending platform and open a lender account to extend financial support to a borrower of his choice. Once you complete the registration process and create your online lending account, you can use it to grant a micro loan and get repayments.
- Choose a Borrower: The peer-to-peer lending platforms allow lenders to browse through the profiles of prospective borrowers. The borrowers are also displayed in different categories based on the nature and type of their financial needs. For instance, you can grant a micro loan to a rural entrepreneur to produce raw material and machinery. At the same time, you also have option to offer financial support to rural people to access clean drinking water, renewable energy, sanitation, basic healthcare and primary education. Each borrower profile will convey you information about his identity, location, occupation, average income and business model. So you can choose a borrower of your choice and change his lifestyle by granting a small-sized loan.
- Grant a Micro Loan: Once you decide the borrower, the website will show you the amount of fund required by him to meet his immediate needs. A lender also has option to fund a micro loan in full or in part. So you can enter the amount you want to invest as a micro loan. Based on the size of your loan, the peer-to-peer lending platform will require you to fund your lender account. You can transfer the funds through your credit card, PayPal account or online bank account. After you fund the lender account, the microfinance organization will collect low capital and give the money to the borrower.
- Receive Loan Repayments: After handing over the capital to the rural entrepreneur, the micro finance institution will collect loan repayment from him. Normally, the micro loans are provided for a shorter period of time. When the organization will receive repayments from the borrower, he will deposit the money in your lender account. You can simply give an instruction to the organization to transfer the funds into your PayPal or bank account. At the same time, you also have option to keep the recovered loan repayments in your lending account, and use the total amount to extend micro finance to new borrowers.
Regardless of your location, you can find a number of online peer-to-peer lending platforms bringing the borrowers and lenders together. For instance, if you want to help a rural entrepreneur residing in India, you can grant a micro loan through popular online lending platforms like Kiva, Rang de and Milaap. However, you must read the FAQs section of the individual website to understand to how the loan is disbursed, monitored and recovered.