Microloans in Senegal, Sudan, and now…San Francisco

For the past four years, aspiring small business owners in developing nations have been able to pursue their dreams thanks to Kiva.org, a unique microlending company that’s become an online sensation.

Kiva has funneled more than $75 million in loans since 2005 to 180,000 entrepreneurs in 44 developing nations. Business owners from El Salvador to Nigeria have benefited from Kiva microloans, opening clothing stores, food markets and bookstores.

Now, as part of a unique pilot program, fledgling American entrepreneurs can take advantage of Kiva’s microloan network. Earlier this month, the company began testing a U.S. expansion, which allows investors to lend up to $10,000 to American startup companies.

The pilot program will provide lending opportunities to 45 small businesses in a handful of major metropolitan areas, including New York, San Francisco and Boston. For this initiative, San Francisco-based Kiva is working with national microfinance organization Accion USA and the Opportunity Fund, a community development lender in San Jose.

The site’s unique platform allows donors to loan $25 or more to a specific entrepreneur. Potential donors can choose from a host of small business owners, whose stories are chronicled on the Kiva site, and track their loan from start to finish, often receiving email journal updates from recipients.

The loan courses typically run six to 12 months. Upon repayment, lenders can move on or decide to re-lend to another Kiva entrepreneur.

About 98 percent of loans are repaid, Kiva president Premal Shah has said.

The company’s foray into the American small business environment comes after a sustained, systemic reticence to lend to entrepreneurs on the part of many U.S. banks, according to Shah.

Despite the stagnant lending environment in the U.S., some business and economics experts question whether pooling American entrepreneurs with their counterparts from developing nation is inherently unfair.

“The needs of U.S. entrepreneurs and entrepreneurs living in developing countries are quite different, and to mix them in one place leaves me torn,” Tamara Schweitzer, a blogger for entrepreneur website Inc.com, wrote this week. “Would I rather help entrepreneurs in developing countries, or some in the U.S. as well? If I give my money to a U.S. entrepreneur, is there someone more deserving of it elsewhere? I think what will be interesting in the coming months is to see where Kiva lenders feel their money is most needed and how overall distribution of funds pan out over time.”

Similar concerns have been voiced inside Kiva’s California headquarters. Some Kiva employees have told Shah that small business owners in developing nations need microloans much more than American entrepreneurs.

“It will be interesting to see if someone from South Central Los Angeles will be able to get a loan on our site more quickly than a small business in south Sudan,” Shah told The Associated Press earlier this month.