Alibaba Aims to Draw Micro-entrepreneurs Online

China's Alibaba Group will fund a microlending program started by a Grameen Bank organization that could eventually draw loan recipients onto Alibaba's e-commerce Web sites.

Alibaba will give the program seed funding of US$5 million and technical support to help loan recipients eventually run their businesses online, it said in a statement Wednesday. The program, which will start in the less prosperous Chinese provinces of Sichuan and Inner Mongolia once it gains government approval, will be run by Grameen Trust, a Bangladesh-based group guided by microlending pioneer Muhammad Yunus.

Alibaba's main site, Alibaba.com, provides a platform for small business owners to buy and sell everything from raw materials to iPods. The group also runs China's top online payment platform and Taobao.com, a user auction and retail site. Alibaba is working to expand its user base on Alibaba.com, which has over 33 million registered business users in China and about 9.5 million users abroad.

The loan program will target poor recipients. More than 8,000 people are expected to take average first loans of about $400 in the program's first five years and with its initial funding, Alibaba said. Alibaba also runs a loan program that assigns credit ratings to small and medium businesses based on their transaction history on Alibaba Web sites. The program, which fills a gap in a country without a central credit system, is expected to facilitate 6 billion yuan ($880 million) in loans this year.

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