The Palestinian intifada has brought about a new desire for economic independence among Palestinians in the West Bank and Gaza Strip. Microenterprises dominate the economy and a number of NGOs are offering small-scale loans to this sector. This article describes an evaluation of Save the Children's revolving loan fund, which has been operating in the West Bank and Gaza Strip since 1986. Businesses have been disrupted by military disturbances and by the Gulf War in particular, and although the repayment rate for this programme has been the highest in the area, the programme is still some way from covering its costs and becoming self-sufficient. The article closes with recommendations for lowering the transaction costs per loan and for reaching a larger number of poorer business people.