I have been reading about microlenders for a while now. I’ve thought a couple times: man, I wish I could help these lenders, or better yet, be a microlender and finance entrepreneurs myself. I just found Kiva, which allows me to exactly this. It’s amazing. Become a loaner now! You can donate as little as $25 and you select the entrepreneurs you wish to lend to. Tara and I have just lent to two entrepreneurs. The details follow.
Location: Bourgas, Bulgaria
Activity: Food Production and Sales
Loan Use: To buy a packing machine
Loan Repayment Term Range: 14-18 months
Vasil Mindov has special engineering education but he was not able to find an engineering job so after his graduation he started to work as a restaurant manager. In 1990 he decided to start an own business and opened one of the first grocery stores in the city. Later when the big food chain stores opened their stores in Bourgas Vasil had to close his grocery. Then two years ago he opened a small manufacture for cereal and cornflakes. He has no serious competition and the products he makes are very attractive. Now Vasil Mindov needs a packing machine for his manufacture. The loan amount is $ 2000.
Maria de los Angeles Castellon
Location: Nuevo Laredo, Mexico
Loan Use: Buy ingredients and equipment
Loan Repayment Term Range: 12-18 months
Maria Castellón began her business a year ago; she has a Snack store in which she sells hamburgers, hot dogs, quesadillas, and sodas. She has great season which has allowed her to stay in the market and get more clients, that is why she has planned to buy more ingredients and equipment for her commercial space, so she is soliciting a loan of $1,500.00 that she expects to pay in 1 year.
So, you may think: yah right, you’re never getting this money back! Actually, Kiva to data has a 94% repayment rate. Also, from what I’ve read about microlenders the repayment is typically in the 90 percentile. For the recipients of these loans this could mean entry to middle class and could potentially benefit their families for generations to come.
The following explanation is taken from Kiva’s one-pager explaining itself.
What is Kiva.org?
Kiva’s mission is to connect people through loans for the sake of alleviating global poverty. Leveraging the internet and a worldwide network of microfinance institutions (MFIs), Kiva lets you lend as little as $25 to help fund small businesses run by low-income entrepreneurs around the world.
How does it work?
Kiva’s model is similar to eBay. Microfinance institutions around the world post up profiles of qualified local entrepreneurs online. Lenders can then browse and choose an entrepreneur they wish to fund. Kiva aggregates loan capital from individual lenders and transfers it to MFI partners to disburse and administer. As loan repayments are made by the entrepreneur, the MFI remits funds back to Kiva. Once the loan is fully repaid, Kiva lenders can withdraw their principal or re-loan it to another entrepreneur.
Most of the poor in the developing world are self employed entrepreneurs. A small amount of affordable capital can dramatically change the life of an entrepreneur and their family. Despite
the fact that over 10,000 MFIs exist worldwide, less than 10% of the global poor have access to affordable capital. Kiva connects MFIs to a new source of low cost, flexible capital – individuals. This additional capital helps MFIs reach more clients in their local community.
Since concluding an initial beta round in Uganda in October 2005, Kiva has expanded to MFI partners 11 countries (see map). Kiva has also established key relationships with PayPal (free transactions) and Microsoft (research grant to enhance Kiva’s web interface with MFIs). Kiva has also received significant early coverage in the blogosphere and press. Kiva is on track to raise over $1M from +10,000 internet lenders and expand to 25 countries by the end of 2006.
: I have to point out I discovered Kiva through Mike’s Blog. Also, Mike has offered to match lending for each person that notifies him. He kindly matched my lending for Vasil and Maria. I’ve mentioned Mike here previously, a wonderful fellow.