Back home in God's own country, 'Blade' is a term used to refer to microcredit because of the cutthroat interest rates. Private lenders lend money to individuals who would not be able to get a loan from a bank. Naturally, the interest rates are higher. And local gangsters moonlighting as recovery agents don't have to try too hard to give the industry a bad name.
Socially responsible microcredit ventures like the Nobel prize wining Grameen bank have changed all that to some extend. But Grameen and other ventures like it are focused on developing economies.
So who does the regular American, with a less than perfect credit rating, turn to when she needs a few extra bucks? She goes online. Sites like Prosper.com bring the latest in online social networking to the old world business of microcredit. Prosper is very similar to online auction sites like e-Bay. The only difference is that instead of sellers and buyers, we have lenders and borrowers. And the site provides the framework for the transaction, verifies the credit worthiness of potential borrowers and takes care of recovery.
Online selling has been around for quite some time. So what took online lending so long even though the underlying technology is almost exactly the same? Not sure. But what this example does indicate is that there are patterns out there. Technology offers new business patterns, not just unique opportunities.
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