There are two types of non-traditional lending that I would like you to explore this week; micro-lending and crowdfunding.

Micro-lending, making very small loans to individual entrepreneurs, is gaining popularity. Organizations like Accion and Grameen Bank are pioneering micro-loans to entrepreneurs all over the world. Most of these loans are only a few dollars, but often they allow poor individuals to start small businesses. Providing someone the funds to start business supports the old adage that, “It’s better to teach someone to fish so they can eat for a lifetime instead of giving someone a fish so they eat for just one day.” Note: The only problem with this statement is that there needs to be a place to fish available, but that’s another issue.

One of the major startup financing changes allows “crowdfunding” for business financing. Crowdfunding is the solicitation of funds from small investors via the internet. This is not a new idea, but using it for funding businesses has often conflicted with federal securities law. The 2012 JOBS act establishes the rules required to use crowdfunding and be in compliance with federal law. Websites such as LendingClub, Kickstarter, Indiegogo, and Prosper are examples of crowdfunding. The What is Crowdfunding? or How Crowdfunding Will Change the Worldvideos will provide more information.

Please take some time to visit the sites and watch the videos; then share your thoughts.