U.S. Lags Behind Other Countries in Microfinance

The practice of awarding small loans is gaining steam as a philanthropic venture overseas, especially among extremely wealthy technology entrepreneurs, reports The Wall Street Journal. But similar efforts in the United States struggle to receive the same kind of attention, the paper says.

According to Eric Weaver, head of Lenders for Community Development, the reason for the discrepancy is that domestic microfinance programs are not profitable, unlike such ventures in other countries.

Microlenders abroad can charge much higher interest rates, upwards of double and triple digits, while regulations prevent such rates from being applied within the United States. Also, foreign microlending operations have much lower administrative and marketing costs than do domestic programs.

Read The Chronicle of Philanthropy‘s coverage of this growing trend.

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