Transcapitalist P2P Fund Adds MicroPlace: Like Kiva with Interest

After profiling the increasing returns offered by Microplace, we decided to add them to the Transcapitalist P2P Lending Portfolio. Microplace, like Kiva, focuses on micro-finance loans to entrepreneurs worldwide; however, they have passed the regulatory hurdles and can offer interest to their lenders.

MicroPlace’s mission is “to help alleviate global poverty by enabling everyday people to make investments in the world’s working poor…Microfinance institutions around the world have discovered an effective way to help the world’s working poor lift themselves out of poverty. These organizations need capital to expand and reach more of the working poor. At the same time, millions of everyday people here in the United States are looking for ways to make investments that yield a financial return while making a positive impact on the world. MicroPlace simply connects investors with microfinance institutions looking for funds.”

What is the Microplace model?

Microplace allows you to select investments offered by microfinance institutions in-country who define the terms of the loans. The microfinance institutions then make loans to the working poor in the communities where they work. Lenders can sort by region, level of poverty, focus (e.g., women-only), rate of return, and repayment date. The side also lists the repayment rates for each cohort, ranging from 95-99%.

What is my expected return?

Rates of return range from 1.5-6% and repayment dates range from 9-48 months. The specific portfolio that we designed has an expected rate of return of 4.2%.

Here is our portfolio:

Total Invested	Investment	Country	Rate of Return	Repayment Date	Repayment Rate
$50	Working Capital for Community Needs	Nicaragua	6%	48 months	98%
$50	Calvert Foundation	Kazakhstan	3%	21 months	98%
$50	MicroCredit Enterprises	Women Worldwide	5%	24 months	95%
$50	Azercredit	Azerbaijan	3%	33 months	99%
$50	Financiera FAMA	Nicaragua	4%	21 months	98%

What do I like so far?

• Really good website. Excellent filtering and upfront information makes for a clear and transparent experience. It’s a fun place to browse.
• High returns. At least for microfinance!
• Easy diversification. Lenders can invest in organizations world-wide with a wide variety of entrepreneurs and rates of returns.
• Great mission. Contributing to combat global poverty with a market solution.

What don’t I like?

• False advertising. The 6% only applies to a couple of investments; the vast majority fall in the 1.5-3% range.
• Distant repayment date. Most loans fall in the 2 year range. During that period, you have no access to your money (unlike Pertuity Direct which has an instant liquidity option for a 2% fee).

Still, I'm glad to see a microfinance p2p platform that allows the lender to earn interest! This will help make the concept more mainstream.

Comments

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False advertising is out their, but if you get good at conducting your due diligence you will be able to spot false advertising a mile away by looking at the financial statements which are publicly available for any corporatation.