June 8, 2010 9:00am by David Farrar

Micro-finance

Trade Me founder Sam Morgan has invested $700,000 in a Pacific Island-based microfinance company that lends capital to women wanting to start their own businesses.

South Pacific Business Development (SPBD) has been working in Samoa for 10 years and has now expanded to Tonga.

Microfinance companies, such as SPBD, provide loans and training for people in impoverished countries and lower socio-economic communities that do not have access to banking services and business mentoring.

I’ve been lending money (and donating to cover the admin fees) through Kiva for a couple of years. Even just a $25 loan can make a huge difference to someone in the third world needing modest capital for their business. 20 people lend $25 and that is $500.

I’ve yet to have a loan be defaulted on. The overall default rate is under 5%, and the beauty of micro-finance is your eggs are not all in one basket.

Great to see Sam Morgan invest in micro-finance, and I encourage readers to check Kiva out and consider doing the same. It is not aid, but a loan to help small business owners start up or expand.