Kiva: Supporting Entrepreneurs Worldwide Through Microfinance

This blog aims to reach readers interested in the intersection of international business development and the entrepreneurial process. As such, some of you will be interested in learning about Kiva which provides a way for anyone that can spare $25.00 to participate directly in the growth of small business around the world.

There are many skilled, experienced, and hard-working entrepreneurs with opportunities to grow their businesses, but who have no access to reasonably priced financing. Most commercial banks must turn down such small loans simply because they would lose money on them. Such loans require a very high administrative cost and high risk relative to the amount of potential return for the lender. It normally makes more business sense for a lender to fund one large loan to a more stable borrower than to process a hundred small loans even if the smaller loans total up to a larger dollar amount. Regrettably, financial reason does not permit consideration of such measures as relative need, direct impact on a family, and equality in opportunity. The unfortunate but realistic result is that generally those who need money the most are the least likely to get it, and those that can prove that they need money the least are able to get money the easiest. The process of microfinance makes it possible for people without little or no collateral or credit to get access to fairly priced small value loans.

Kiva provides a platform for micro-lending that connects individual lenders and borrowers by compiling loan opportunities from well established microfinance institutions around the world. Users are able to research loan requests from entrepreneurs and small businesses around the world. The lender can see pictures of the borrowers, read about their lives and businesses, and understand their goals upon receiving their loan. Loans can be made for as little as $25.00, and the lender receives updates and reports about the impact of their loan.

Loans go directly to borrowers via Kiva's microfinance partner institutions. Thanks in part to the support of PayPal providing free payment processing, Kiva is able to give 100% of your loan directly to borrowers. Although it may seem that this type of loan would be very risky, the payback rate is actually very high. When your loan is paid back, you have the option to withdraw your money, or to give back through another loan. Please have a look at Kiva's website and consider lending.