What is MicroPlace and How it Works

MicroPlace is a platform that allows individuals to lend small amounts of money to entrepreneurs in developing countries. It's a way for people to make a positive impact on the world while earning a return on their investment.

MicroPlace was launched in 2006 by eBay, with the goal of providing access to capital for small business owners in developing countries. This innovative approach to microfinance has helped thousands of entrepreneurs access the funding they need to grow their businesses.

By lending through MicroPlace, investors can choose from a variety of loan projects, each with its own risk level and potential return. Investors can lend as little as $25 to a single borrower or spread their investment across multiple projects.

MicroPlace is a for-profit company owned by eBay, which allows everyday internet users to invest in the world's working poor.

The site is notable for allowing users to earn interest on their investment, a first in the microfinance industry.

MicroPlace was founded by Tracey Pettengill Turner, who has a background in poverty issues and worked with refugees in Sudan and at Grameen Bank in Bangladesh.

Turner met eBay and PayPal execs in summer 2006 and they were intrigued by the idea of a marketplace for microfinance, leading to eBay buying her company and helping it launch.

At launch, MicroPlace offers a limited array of securities, allowing individuals to invest in specific funds in specific countries at interest rates of between 1 and 3%.

Users will receive quarterly interest payments and updates on the individual entrepreneurs each fund is assisting, providing a personal touch to the investment experience.

MicroPlace offers a range of features designed to make investing in emerging markets more accessible and efficient.

One of the key features is its platform, which allows users to lend as little as $25 to entrepreneurs and small businesses in developing countries.

The platform is designed to be user-friendly, with a simple and intuitive interface that makes it easy to navigate and find investment opportunities.

MicroPlace offers a range of investment options, including loans to small businesses and entrepreneurs in countries such as Peru and Colombia.

These loans are typically for small amounts, ranging from $500 to $5,000, and have a relatively short repayment period.

Investors can choose to lend to a single borrower or diversify their portfolio by lending to multiple borrowers.

By lending to multiple borrowers, investors can spread their risk and potentially increase their returns.

MicroPlace also offers regular interest payments, which are typically made monthly, providing investors with a regular income stream.

Investors can also choose to reinvest their interest payments, which can help to increase their overall returns over time.

The platform also provides regular updates on the status of loans, including repayment schedules and any issues that may arise.

This level of transparency and reporting helps to build trust and confidence among investors, and provides a clear understanding of the investment process.

If this caught your attention, see: Community Bank Lending

Kiva, a well-known microfinance institution, has been accused of promoting organizations with exorbitant interest rates to its lenders.

LAPO, one organization featured on Kiva, charges an effective annual interest rate of nearly 126 percent.

This rate is significantly higher than what Kiva's website claims, which lists interest rates between 18 and 60 percent.

Kiva's president, Premal Shah, attributes this discrepancy to outdated information, claiming it was "stale as opposed to misleading."

However, this raises questions about how many other interest rates are much higher in reality than the ones quoted by Kiva.

Here are some interest rates charged by LAPO:

This highlights the need for lenders to carefully review the interest rates and fees associated with their loans, especially when investing in microfinance institutions.

eBay has acquired MicroPlace, an organization that facilitates micro-finance.

MicroPlace plans to launch a web-based marketplace to connect people with micro-finance entities that need capital.

This marketplace will be similar to eBay, but with a focus on social lending.

A different take: What Is Microfinancing

The founder of MicroPlace, Tracey Pettengill, is also co-founder of the Silicon Valley Microfinance Network.

Two micro-finance marketplace sites already exist, one calling the phenomenon "social lending".

Prosper, one of these sites, was started by e-Loan founder Chris Larsen and is backed by Benchmark Capital, which also funded eBay.

UK's Zopa, another micro-finance marketplace site, is also backed by Benchmark Capital and is funded by several venture capitalists.

eBay's Chief Marketing Officer, Gary Briggs, made the public mention of eBay's acquisition of MicroPlace during a "Town Hall" event.

For another approach, see: Venture Capital Financing