The San Francisco-based Janta Foundation recently launched a website that allows individuals to make loans of USD 25 or more to be used for education in India or Nicaragua. The loans – the repayment of which can be tracked online – generally have terms of six to twelve months. Lenders can reportedly choose which students to support based on short biographies, although other “peer-to-peer” sites that appear to offer this connection actually lend in bulk to microfinance institutions that select the actual borrowers (see the MicroCapital news wire on Kiva dated November 11, 2009). Janta does use “field partners,” which include educational and microfinance institutions, to disburse funds. While lenders do not earn interest on loans they make, field partners do charge interest to cover their costs. As for the likelihood of repayment, Janta’s website says, “To minimize your individual risk, we recommend you not invest more than you can afford to lose…. With younger clients and longer loan terms, education microloans are expected to have higher default rates than traditional microfinance. In addition, default rates are also expected to be higher for extremely poor clients who are typically excluded from traditional microfinance.” Janta is partnering on the project with the Namaste Foundation, a San Francisco-based nonprofit that provides loans and training to microentrepreneurs in Mexico and Guatemala.

Sources and Resources

Venture Beat article:
http://venturebeat.com/2009/12/22/janta-foundation-launches-p2p-micro-loan-site-for-child-education/

Janta:
http://www.jantaloans.org/

Namaste Foundation:
http://namaste-direct.org/

MicroCapital news wire on so-called “peer-to-peer” lending:
http://www.microcapital.org/news-wire-united-states-new-york-times-calls-kivas-person-to-person-model-an-illusion/