Microloans Surging in Silicon Valley A daycare provider needed cribs and high chairs. A coffee truck needed a generator. A couple renting party supplies needed to move from a garage into a storefront. When these Silicon Valley small businesses needed an influx of cash, and fast, they didn't find help at a bank. They turned instead to a type of financing more commonly associated with buying a sewing machine for a Guatemalan tailor or a tractor for an African farmer. Microlending, a decades old form of financing for the world's poorest, is now booming in Silicon Valley. The region leads the country for microlending as a growing echelon of would-be businesspersons who can't qualify for traditional bank loans meets money from cash-rich techies and firms, including eBay and Microsoft, who want to donate in innovative ways. "Our clients are entrepreneurial people, but the mainstream financial system doesn't work for them," said Eric Weaver, founder and CEO of the San Jose, Calif.,-based Opportunity Fund, which invested a record $7.6 million in loans to small businesses last year, creating about 1,900 jobs. Beneficiaries range from dry cleaners to barbeque joints, and the lender is now believed to be the largest financer of food trucks in the state. "A food truck or a hot dog cart is a U.S. equivalent of a cow in a developing country," he said. It's something a family can support itself with. Paul Cruce tried banks, and even the high tech crowdsourcing route to get his Holy Cow Coffee Company to join the "upscale food truck brigade" before turning to Opportunity Fund. Today, with a new generator powering the refrigerator, espresso machine, coffee brewer and crepe griddle, the Holy Cow truck is a popular attraction at farmer's markets. "I borrowed from Opportunity Fund rather than a bank because they are more in tune with the needs of small business and have more favorable credit terms," said Cruce. Microlending was devised by Bangladeshi banker Mohammad Yunus, who won a 2006 Nobel Peace Prize for developing the financial instrument that supports would-be business owners too poor to qualify for traditional bank loans. Today, the global microfinance industry has more than 200 million clients with $73 billion in outstanding loans, according to the London-based Centre for the Study of Financial Innovation. Just a small fraction of those - about $165 million - are in the United States, where about 400 institutions offer microloans. Those firms typically give about 45 loans a year, compared with a record 1,200 from Opportunity Fund last year. The program, which is nonprofit and sustained by donations, has extended to Los Angeles in recent years. And this summer, Opportunity Fund teamed with Pacific Coast Ventures to target loans to Santa Cruz and Monterey counties. Because microlenders work closely with recipients, providing financial education and business support, the microloans in the San Francisco Bay area have a delinquency rate of under 1 percent, compared with loss rates of about 5 percent for more typical loans. Rates range from about 8 to 12 percent, well below the 30 percent credit card rates many entrepreneurs use to try to launch businesses. Despite a booming tech industry, the region faces growing inequality, stagnant job growth, soaring housing and transportation costs and widespread low wages. Small business owners who are largely immigrants point to their microloans, usually around $15,000, as a turning point for "making it."