For those seeking an alternative holiday gift, microloans are one way to give. And, little known to many investors, some microlending agencies offer relatively low-risk investment opportunities that can pay 2 to 3 percent interest, offering an opportunity for a modest return coupled with a chance to help budding entrepreneurs.

Some agencies accept tax-deductible donations, starting from $1. For investors, some opportunities are available with investments as small as $20. In both cases, the microlending organizations pool the money – sometimes together with funding from foundations or the Small Business Administration – to lend to disadvantaged individuals. For seasonal gifts, donors can also buy products made by businesses funded by the agencies.

The goal is to help recipients – both in the United States and abroad – achieve financial stability by building their own business rather than relying on handouts.

This kind of financial empowerment is a “panacea,” said Wendy Baumann, president of the Wisconsin Women’s Business Initiative Corp., a microlending agency. “If individuals are sound, they can provide education and health coverage for their family … and don’t need to be handled through welfare.”

In the U.S., 260 microlenders have assisted some 116,000 entrepreneurs so far this year, according to Elaine Edgcomb, a microfinance expert at the Aspen Institute. Over the last five years, microlending agencies awarded $1 billion to more than 1 million participants, according to the Association for Enterprise Opportunity.

Photo by jenn_jenn.

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