Groups and cooperatives have been microlending for hundreds of years. One of the larger and most popular programs was called the Irish Loan Fund. Started by Jonathan Swift in the 1700s, the fund provided loans to low-income families in rural areas. Swift recognized that individuals with no credit experience and little collateral could still be considered creditworthy. By the 1800s, more than 300 programs throughout Ireland were loaning small amounts of money for short periods of time. It was estimated that at the peak of this loan period, 20% of all households were utilizing the program.
Over the years as banks and institutions continued to expand, their business models forced them to focus on loans to profitable pools of candidates. It became harder, if not impossible, for the underprivileged to access the loan market. In 1983, a visionary by the name of Muhammad Yunus defied social norms and against the status quo, founded a bank focused on providing the poorest of Bangladesh with very small loans. Based on the belief that credit is a basic human right , this concept of solidarity lending evolved. By leveraging social capital, lending through solidarity groups forces the group to assume moral responsibility for the loan and thus serves to support the broader objectives of lending.
So while the concept of microlending is not new, the idea of accessing it through new borrowers are beginning to gain access through innovative ways. On its platform, Lenddo Members are invited to form a Trusted Network of friends and family members who attest to their credibility and, in turn, their creditworthiness. Lenddo then interprets the quality of this network through its proprietary algorithms and makes quick credit decisions when our Members most need capital.
Lenddo’s model for providing credit is akin to the Collaborative Consumption trend that is disrupting traditional models of business and reinventing what and how we consume. Effectively, it is helping to replicate access to an age-old business model of microlending through new-world means of technology and social media. USA Today calls Collaborative Consumption ‘America’s new business model sharing’. In 2011, Time Money magazine named Collaborative Consumption one of the ‘top 10 ideas that will change the world. ‘ Already, Lenddo’s ability to extend life-improving loans to our Members in the Philippines and Colombia demonstrates the power that can be harnessed through collaboration.