Have you heard about Kiva? Kiva is a free web site that lets you provide micro-loans (in amounts of $25) to impoverished entrepreneurs needing investment to make their businesses thrive. The entire loan amount goes to the entrepreneur and is facilitated through Kiva’s partnership with local micro-lending organziations in each country. The micro-lending organization collects interest and you are repaid the principle on the loan. You can voluntarily donate a couple of dollars to the Kiva site to keep it going, when you check out. These loans go to people with demonstrated entrepreneurial success, but who are so poor that they lack the means to get anything but an exploitative loan to invest in supplies, materials, or equipment, were it not for Kiva and you. When your money is paid back, you can re-lend it. We have a number of these loans in play and have been paid back many times and re-loaned again to new entrepreneurs. It’s a simple check-out cart system.
Example: Kossi in Togo needs $1200 for a new taxi (his old one is on its last leg). With this money, he’ll be able to feed his family for some time. He’s not looking for a hand out; he’s just asking to borrow a little and repay, because in his country the cost of a new taxi is pretty hard to come up with all at once. If he can keep working, because of you, me, and Kiva, he’ll be able to pay it back as he continues to earn income. (Update: The loan was issued, and Kossi is now at 92% repayment on this loan). You loan $25, and over the next week or so many Kiva lenders also put in $25. The total is reached very quickly, and the microlending organization is funded to provide and administer the loan. over the next 6months, year, or whatever the loan terms indicate (the terms of Kossi’s loan were 26months), the borrower pays it back, you receive the $25 back, and you can either withdraw it then or re-lend to a new entrepreneur. You can fund a loan with your paypal account, credit card, or other means.
Example: Surayo in Tajikistan makes women’s wear out of her home. As a contractor, her business has been growing, and she needs a loan of $700 to buy special material to increase her line. She plans to eventually open her own company producing and selling clothing, and she needs the material to make her own stock of clothes to move in that direction. You loan her $25. I loan her $25, and a lot of other people do as well. These are pooled into one microloan, which she gets as one sum, expands her business, and is able, with this kind of help, to get farther from poverty and closer to creating income that can not only sustain her but possibly employ others, while it contributes to her economy. Update: Surayo’s loan was issued and it’s 100% repaid now. She’s wonderful!
We’ve been lending through Kiva for a few years. It works, it’s honorable and straightforward, and if money is tight, you can lend with confidence, because the loan default rates are slim – most lenders repay, because they really are trying to build their business. What’s more they are building a business that’s thriving and in demand in their economies – they’re savvy, smart people who know what their clients are demanding, and just need some funds to be able to deliver it at the rate of demand. They don’t do unwise things like open a coffee shop in a farming community that already has two of them. At most, you risk $25 at a time (though you may want to fund several small entrepreneurs – it’s easy to fall in love with these people – they’re family), and you can make a dent in poverty by helping people get a handhold on something real – their work. Visit www.kiva.org and you’ll see what I mean. We’re committed participants.