Peace Through PayPal?

Web site allows Americans to lend money to needy entrepreneurs worldwide.

ByABC News
June 4, 2007, 8:17 PM

June 5, 2007 — -- In Kirkuk, a city in northern Iraq that wavers between war and unsteady peace, a woman named Khadeja runs a beauty shop in the poorest section of town. She needs $1,200 to keep her business going -- a business that supports her parents and disabled brother.

In Los Gatos, Calif., a real estate broker named Debby Bright is giving her a loan.

Separated by roughly 7,000 miles, Bright and Khadeja connected through Kiva, an online lending network which recently added Iraqis to its list of entrepreneurs in poor countries who are looking to build up a business.

On Bright and others like her log on, browse the pictures and profiles of small business owners and make micro loans -- usually $25 to $50 each -- with the click of a mouse.

Once the full value of the loan is collected, it's wired to a Kiva field partner in that country, who then delivers cash to the entrepreneur.

Khadeja gets her loan, and Bright gets to feel she made a difference.

"She's an entrepreneur and I'm an entrepreneur, and I know how important it is to have one's own business," Bright told ABC News. "I feel we as a nation owe something to these people."

The first Iraq entrepreneurs to join this lending service went up on the Kiva Web site just two weeks ago. Photographs of their faces were blurred to protect their identities, and the requests were accompanied by this disclaimer: "This entrepreneur is from a volatile region where the security situation remains unsettled. Lenders to this business should be aware that this loan may represent a higher risk and accept this additional risk in making their loan."

Nevertheless, the Iraq postings sparked what seemed like a feeding frenzy online. Within a few hours all the loans were fully funded -- from the hair salon to a request for a new sewing machine and a request to rebuild a computer shop that had been burned to the ground in a terrorist attack.

"A lot of people had the same reaction I did, which was, 'This is my chance!'" said Christian Conti of Washington, D.C., who loaned $25 to a mobile phone shop owner in Kirkuk. "As someone who watches the news play out day to day and all you hear is the negative news you say, 'Man, I wish I could do something.'"