Wednesday, March 17, 2010

A new microcredit website for education

After working for Cisco Systems in California's Silicon valley for over nine years, Sunny Mahant moved on to develop a Kiva-like microcredit website. A trip to India inspired Mahant's sudden career change and creation of Janta Loans. Mahant saw the many children who were working instead of attending school to help their parents earn the family's income. So Mahant decided to start a social business to loan the children the money to begin an education.

From this San Jose Mercury News story that we found at Illinois' Belleville News-Democrat, writer Mike Cassidy explains how the new website works.

Mahant's vision: Work with nongovernmental organizations in developing countries to find those in need; and introduce donors to borrowers by posting their photographs and telling their stories at

Donors lend or contribute to individuals who need money for supplies or tuition, or need money to replace lost income when they go to school instead of work. Financial partners service the loans and keep interest payments. Lenders are repaid the principal and Janta seeks contributions to cover operations.

"We're at what I consider the first stage of the product line," says Mahant, who has a 15-month-old son, Yogi, who sometimes makes him feel like his whole life is in startup mode. "We hope over time, if we can pull this off, we will ourselves be a global microfinance organization."

Microfinance has shown great potential in the developing world, where a little money can go a long way. Ideally, entrepreneurs pay loans back from profits. When it comes to students, the model is slightly different, Mahant says.

He says some who receive loans through Janta will need the money for upfront costs, such as tuition, that they can pay back over the year. Others will need bridge loans to help with expenses between harvests. Some will take loans for trade school. They will presumably find work that will help them pay back the loan. Ideally, some lenders will be willing to make long-term loans or even provide grants.

Mahant, who uses the language of business, says Janta is in beta. The nonprofit itself funded about 125 students in India and Nicaragua to see how its system would work. Mahant says the pilot was encouraging, but he knows starting an enterprise is no easy matter.

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