Microfinance for the rest of us! or, "Either a borrower or a lender be..."
By Ian
I don't keep up with the literature and developments, but it sounds like someone might have to edit the opening bits of the Wikipedia definition of Microfinance.
Peer-to-peer loans are now possible through Prosper. You can borrow, lend, and even set the interest rate. Lenders bid on listings with an amount and a rate. The listing can be re-submitted if the person didn't get enough money or accept the offers the first time around. I'd be interested to see if and possibly where offered interest rates and credit ratings start to converge.
Notably, the repayment period is fixed at 3 years, and direct withdrawal of funds from a bank account seems to be required (though I've not read the entire site). If that's the case, this won't be entirely useful to the poor, who tend not to have bank accounts for withdrawal, or who close them more regularly in order to withdraw the very last funds (many banks require minimum levels of money; even levels as low as five dollars are frequently broken and accounts closed). Though, perhaps the fact that this is an online tool means already eliminates that demographic.
Deciding the prudence of lending to or borrowing from people named "loanchimp", "janeybooboo", "Caravaggiosnose", or "MC Arbitrage" is an exercise left up to the reader.