Thursday, May 9, 2013, AM | 2 Comments
There are many programs about peer-to-peer micro-lending, one of which is Kiva.org that’s still in business. Another one is Virgin Money (VM) but it’s closed to the U.S. market. VM serves only UK, Australia and South Africa. Kiva is open to all. Kiva is a nonprofit organization that promotes itself as a link between small individual lenders and small individual borrowers.
What is Kiva?
Kiva is the world’s first online lending platform connecting online lenders to entrepreneurs across the globe. It’s a non-profit organization. Its mission is to connect people through lending to make poverty less of a burden on individuals and families than normally is.
Kiva was first developed in 2005 for the sole purpose of linking folks with screened “micro-preneurs” in the developing world. The program is now available in the United States as well. You can lend as little as $25 in capital to the Kiva applicant of your choice.
From its website
I get the impression from its website that when the money is paid back, you can withdraw your original investment, donate it to Kiva or lend it to another needy applicant.
A 1% default rate and a 97% on-time repayment rate, which means that, right now at least, your money is safer in the hands of the world’s poor than in your 401(k) account.
Kiva is a charity, not a broker
That means you don’t earn any interest. Learn how Kiva works.
Open an account for as little as $25
With so little money, you can help Third World needy folks who have next to nothing by starting a small business. For example, Reina Isabel raised $150 of a total of $900 to expand her tortilla business with a griddle, corn, cheese, pork, and other products.
Choose from hundreds of profiles
This way you decide who is to receive your loan. The recipients typically repay within 12 months, at which time you can withdraw your money or start the process all over again.
Reservation by some…
Some folks raised questions when Kiva included the United States of America for folks to receive money from lenders. Their argument is that Kiva program was developed basically for third world underdeveloped countries. They were supposed to be the biggest and the only beneficiaries to get financial help from through programs like Kiva.
My opinion is that’s fine. The third world countries should get the bulk of the loans where folks don’t have enough money to start their business. However, why do we have to to exclude the needy in the United States. Many in America live as if they live in the third world countries. They need to borrow as well.
A $1,000 loan can go along way to start a small business whether the recipient is in the States or elsewhere. We are all humans and we waste a lot whether we live here in the States or in a third world country.
So thinking that American public waste their money – which is quite true in most instances – people in other countries waste too. That argument is not enough to raise questions why Kiva has included the needy in America.
In a Nutshell
The borrowers tend to be small-time entrepreneurs in need of money for inventory and equipment that offers quick payback potential. Be warned: your Kiva loan does not pay interest – only the return of principal.
So go ahead, learn more about Kiva and then when you decide you can help needy folks with starting their small business, register with Kiva and start helping alleviate poverty. To get a better feel for what the money is spent on,
View All Entrepreneurs here.