PARIS, FRANCE: Thi in Hanoi needed 190 euros ($260) to buy feed for her pigs and chickens and cloth for the workshop where she makes children's T shirts and trousers.

She was able to raise the money after Mamisa from Nailly in France and five other people combined to provide a loan through Babyloan.com, Europe's biggest peer-to-peer microcredit site. www.babyloan.org

Launched in 2008 by former Merrill Lynch banker Arnaud Poissonier and Aurelie Duthoit, a management school graduate who worked in microfinance before helping to set up the site, Babyloan has so far financed more than 2,000 projects.

"We are not very big yet but our development in the first year corresponds to the big American sites," Poissonier told Reuters on the margins of an anti-poverty function in Paris.

Similar online lending sites like Kiva (www.kiva.org/) in the United States have already shown how successful the idea of linking individual borrowers and lenders through the internet can be.

Almost $120 million in loans have been made through Kiva by nearly 670,000 lenders from 191 countries and the site was last year named as one of five winners of the Index award, a Danish prize to reward projects that "improve life globally".

Babyloan is still small in comparison. It has 5,400 members with loans of 560,000 euros but Poissonier hopes that it can grow to include 100,000 members within three years and generate loans of 10-15 million euros.

"It's quite a good sign," he said of the progress made in building up the operation so far.

Originally developed by the Nobel Prize-winning Bangladeshi economist Muhammad Yunus, who lent small sums to destitute basket weavers in the mid-1970s and later founded the pioneering Grameen Bank, microlending has become a global phenomenon.

Online sites like Babyloan or Kiva have taken the idea of lending small sums to help lift people out of poverty to create a direct personal link between lenders and borrowers.

Each potential borrower, picked by local microfinance organisations who guarantee the loans, is recorded with a photograph and a short account of their business and lenders too can display a profile.

Somaly, a 31 year-old Cambodian mother of four who wants to buy products to sell in her village shop; Pepita, a mother of five in the Philippines who wants to start a cooking business or Jose Maria who makes brushes in Ecuador are typical cases.

"The big satisfaction is on the ground, when you see someone who has received a microloan smiling with pride because they have shown they can help themselves and repay the loan," Poissonier said.

"It's a magnificent expression of human dignity."