I started doing this back in 2005, start with just $50 I have in my PayPal account. Use kiva.org which featured in PBS show Frontline you can read the article here.
kiva is great, people from 3rd world county would post their business plan and the amount they are asking for. There is a screening process done by partners, the borrower usually ask for few hundred dollars, so you and other "investor" would pool the money and loan the money. You can see the money getting repaid (an email alert is sent)! BTW, this is NOT FOR PROFIT so your'll get the $50 back not a penny more ( you could loss money but it hasn't happen to me yet) the low interest that was paid goes toward the kiva and partners that help supporting microloan.
Why doesn't these people go to the bank you ask? Well, if you have gone to your local FDIC insurance bank you'll realize the interest rate is very high... and most of the 3rd world country entrepreneur does not qualify. hence the mico-loan.
If I can help someone's life just a little better cross the world $50 is a small price.
Update:
Q: Is the loss of loan tax deductible?
A: No it's not. Only if you donate to kiva than it's tax-deductible
kiva.org's site answer alot of question and the community is very friendly feel free to post your question there. More video can you found on http://www.youtube.com/user/kivamicrofunds
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