Little Loans Make a Big Difference
Microlending with Kiva
In an innovative effort to alleviate poverty and empower entrepreneurs around the world, Kiva, an international nonprofit, has developed a microlending platform. Since it was founded in 2005, Kiva has funded more than one million loans, totaling in excess of $800 million with a repayment rate over 98 percent.
Kiva for Lenders
“Leveraging the internet and a worldwide network of microfinance institutions, Kiva lets individuals lend as little as $25 to help create opportunity around the world.”
Similar to crowdfunding websites, individuals can browse Kiva’s site and lend money to “borrowers” around the world. The important difference between crowdfunding and Kiva’s microlending is that the lender will be repaid for the loan.
Currently, there are over 4,000 borrowers to choose from. These groups or individuals are seeking microloans as a financial solution to meet needs ranging from tuition for a child’s education to funding a startup or sustaining a business. Lenders can send as little as $25 to the cause that resonates with them.
All Kiva loans are disbursed by Field Partners who vet each borrower and work closely with them through the entire process. As the borrower repays the loan, the lender receives updates and the money will return to their Kiva account. After the borrower repays the loan, the money can be used to support another borrower, donate to Kiva or it can be withdrawn.
Kiva for Borrowers
“Kiva Zip seeks to provide affordable capital to financially excluded entrepreneurs, and those that are making social impact while growing their small business.”
For entrepreneurs in the U.S. interested in loans with 0% interest and no fees, Kiva Zip might be the solution. Borrowers can receive up to $5,000 on their first loan, and second time borrowers can receive up to $10,000. The primary criteria for qualification is that the loan must be seen to have a positive social impact.
To apply, an entrepreneur first submits an online application. Next, the entrepreneur joins the Kiva Zip community by making a loan to another small business owner. Then the entrepreneur must prove their creditworthiness via their “character and trust network.” This involves asking for fundraising support from the entrepreneur’s friends and family. The entrepreneur’s endeavor then will be posted to Kiva Zip where it is accessible to all of the Kiva lenders.
Kiva for Columbus
“Columbus is committed to becoming a Kiva City, a partnership of local community groups and microfinance organizations working together to connect lenders with entrepreneurs.” — Columbus Mayor Andrew Ginther
In the early summer of 2016, Kiva Zip will be introducing a local platform that lists only local borrowers for lenders — Kiva Columbus. The new Kiva City is sponsored by the City of Columbus and The Columbus Foundation. After it’s launched, the national Kiva organization will build and manage the Kiva Columbus online platform.
To use the Kiva Columbus platform, a business must be endorsed by a trustee organization, a for-profit or nonprofit entity, that publicly vouches for the business. Once endorsed, the business has a 15-day private fundraising period when the borrower and the trustee organization solicit borrowers from their personal networks until they receive 20–30 individual lenders. Once these two requirements have been met, the fundraising campaign is posted on the public Kiva Columbus portal to be available to all Kiva lenders. Borrowers then have up to 45 days to raise the amount they are seeking.
Whether you are a lender or a borrower, or you’re interested in supporting your local community or a cause abroad, Kiva presents the opportunity to empower individuals around the world.
Become part of the Kiva community and start microlending for the greater good.