TODAY'S TURN: Make a loan with excellent returns

THE ISSUE:
Being an entrepreneur is tough enough. Now imagine trying to keep that business afloat in a developing country where local money lenders can easily charge annual rates of 60%-800%. When you need more fabric, feed or fruit, where do you turn to help your business survive, much less grow? Makes it tough to become economically independent, doesn't it?

THE GOOD TURN:
Making a one-time donation to a relief organization is certainly admirable. But what if you could donate the same $$$$ over and over and over, and help several budding entrepreneurs achieve success?

I had heard about microfinancing, but didn't know how it worked. And I certainly never knew I could do it myself. Kiva.org was a good place to learn. Kiva connects you with entrepreneurs from around the world who are in need of short-term microloans, often as small as $25. Whether it's a firewood seller in Indonesia or a farmer in Azerbaijan, Kiva routes your money through local field partners, respected microfinance institutions in the borrower's home country. When the loan is repayed (usually within about a year) you can either withdraw your money or recycle it into another business.

Two things surprised me as I learned more about this concept. First, the repayment rates are pretty high -- Kiva reports a rate of 96%. If you're considering making a loan, I'd definitely suggest checking out the field partner; their success rates and the advice they offer business owners can vary a lot. Second, while Kiva doesn't get a cut, these partners do charge borrowers an average of 22% interest, though some can charge as little as 3%. It seemed high by Western standards, but Kiva presents some pretty good reasons why it's higher than conventional loans (the worldwide average rate for microloans is about 35%).

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