As the Gateway explores the world in search of interesting and relevant microfinance news, we hear more and more about microfinance in the United States (US). For instance: two recent conferences were held on US microfinance - Microfinance USA and the Underbanked Financial Services Forum; Kiva announced their Kiva City initiative to expand microfinance in the US; CNN featured the 10 top microfinance companies in the US and The Economist published several articles on the topic in 2011. All of this attention made us think that the topic deserved a second look.

Below are five interesting things we learned about microfinance in the US:

1.) Microfinance in the US is not new (though use of the term "microfinance" is relatively new).

In fact, non-bank lending to small businesses dates back to the 1970s (and beyond on a more informal basis), around the same time that Professor Yunus began making loans in Bangladesh. The Community Reinvestment Act (1977), requiring banks to invest in the communities where they do business, helped spur the growth of community development finance institutions (CDFIs).

962 certified CDFIs currently operate in the US, though only a sub-set of these offer loans to microenterprises. A report by FIELD, an initiative of the Aspen Institute, estimated that 362 microlenders made 9,191 loans in FY2008, totaling $100,912,050 (average loan size about $11,000).

In addition to CDFIs, a growing number of alternative financial service (AFS) providers are trying to tap into the profit potential of the low-income market. Payday lenders and pawn shops have long existed, but they face increasing competition from new entrants, such as pre-paid debit cards and big-box retailers (like Wal-Mart). Experts hope increasing competition will spur innovation and drive prices down.

Read more here!