Yeah, yeah. I was sure I knew all about microfinancing.

Kiva.org. Muhammad Yunus. Creating entrepreneurs and changing lives for an investment of pennies a day in India, Pakistan, Vietnam and the rest of the developing world.

I'm a smart guy, see. So smart that I recently found myself standing in a business started with a microloan in the exotic outpost of Mountain View, Calif. It was a dance studio that I'd driven by dozens of times, never giving a thought to where the money came from for the rent, costumes or the sound system that plays the music that keeps the aspiring ballerinas quite literally on their toes.

I ended up at Stars in the Light dance studio after a conversation with Eric Weaver, CEO of San Jose-based Opportunity Fund. The nonprofit is the biggest microlender in the San Francisco Bay Area. And it so happens it lent Svetlana Taran $15,000 so she could open the Mountain View studio.

"There have been people practicing microfinance in California for years," Weaver told me. "And maybe there is not a lot of awareness that it is happening here."

Me? Not aware?

Turns out microfinance is big in the United States, though not as big as Weaver and many others would like it to be. Opportunity Fund says there are at least 20 million U.S. microbusinesses, which generally means businesses employing fewer than five that borrowed less than $35,000 - often much less - to start up.

And just last week Kiva, the San Francisco nonprofit that made international microfinance a household name, launched a Web-based way for individuals to make small loans to small businesses in the United States.

Microloans, typically a few thousand dollars, are aimed at helping people raise themselves out of poverty. They go to entrepreneurs who can't get conventional credit: immigrants, women with little credit history, borrowers with good prospects but bad past credit.

The loans are usually made through nonprofits with money from foundations, government grants and traditional lenders. The loans come with business education and advice.

Weaver's organization has lent about $10 million to 800 Bay Area businesses since 1995. Still, Opportunity Fund estimates that about 50,000 potential enterprises in the area need microfinancing help.

"Somebody can use it to buy toys and furniture and open a licensed family day care and begin generating income," Weaver says. "They can buy a second hot dog cart."

The option is more important than ever as the Great Recession drags on. Weaver says he can think of few better economic stimulus plans. Small businesses create jobs even in hard times, while big companies cut them.

Yes, expanding microlending depends on donors. The loans are paid back with interest. (It's a big range. Think roughly 5 percent to 15 percent from nonprofit lenders.) But nonprofits don't always recover the full cost of making the loan and providing support.

Weaver says microlenders also need to get the word out among potential borrowers.

"The one thing I think we need most to take it to scale," he says, "is raising the awareness that it is here so that people know to look for it."

To that end Opportunity Fund, Kiva and Silicon Valley Community Foundation late last month hosted a daylong microfinance conference at Stanford University. The day's agenda was none-to-subtly labeled "Microfinance: It's Happening in Our Backyard." About 500 attended to debate the future of the industry in the United States and to discuss models that might broaden the success of the practice.

It was during one of those sessions, a field trip to two businesses launched with microloans, that a group of conference attendees met Taran and even took an impromptu salsa lesson from her.

Taran, who was a dancer in Russia before immigrating in 1991, had always wanted to open a studio. But banks wanted nothing to do with her.

"I couldn't show them a business being active for several years," she says. "I could not show them a profit-and-loss statement."

Instead she went to Opportunity Fund, which focused on her passion and her ability to learn from the organization's business education program.

Taran moved into the studio in February. She's hired two instructors and enrolled 17 students - children and adults. One day, she says, she'd like to see her operation grow into an academy that attracts dancers from Italy, Russia, Switzerland and elsewhere. You know, an international dance academy.

Yes, an international dance academy. Built on microloans. Right here in Silicon Valley.

(Mike Cassidy is a technology columnist for the San Jose Mercury News. Read his Loose Ends blog at blogs.mercurynews.com/Cassidy and contact him at mcassidy@mercurynews.com or (408) 920-5536.)

(c) 2009, San Jose Mercury News (San Jose, Calif.).

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