Kiva loans are a slightly complicated process involving microlending. This is the lending of small sums of money to people, often in less affluent countries, who will use the money to enhance a business, pay off debt or otherwise achieve financial solvency through a loan. Part of the way that Kiva gets its money is through many individual lenders. They invest about $20 US Dollars (USD) or more that becomes part of the money loaned to those who need it.
Kiva loans get complicated and are often misunderstood by the public in two directions. The company doesn’t function as a direct microlender. Instead it has a partnership with many smaller lenders who might operate in each country. Ability to obtain Kiva loans could be based on access to one of the lenders listed on Kiva’s web pages, which are called lending or financial partners.
Similarly, when folks invest in Kiva, they usually aren’t investing in one person listed on the website, though this might seem to be what is occurring. Chances are, a person already listed has received a loan from one Kiva’s financial partners. Investment appears direct, but in reality, it is not so direct. Instead, those contributing to Kiva loans are either paying back the financial partner’s prior investment in people, or they are funding some new loan for someone who is not yet named.
The fact that Kiva loans are not as direct as they would appear doesn’t make them less helpful or useful. Microloans can be a way for many to gather money they could never obtain to either start or grow a business. Companies like Kiva show a very high rate of repayment, suggesting most people who borrow from their financial partners are able to make a profit and repay their loans. Amounts can be variable, often depending on US dollar value versus country economy. Some people might only need $100 US Dollars (USD) or less and others will need higher amounts.
It is the contention of Kiva and other microlenders that lending in this way has an enormous impact in less developed countries in particular. Individuals who invest in microlenders may also be able to tailor their investments to a certain degree. They might invest in financial partners that lend the most money to women or who live in a specific location.
People interested in getting Kiva loans may not have as many choices. They’ll need to apply directly to lenders contracting with Kiva, and they might not be available to receive loans based on prior financial status or credit history. Some companies that now offer microloans in the US won’t loan to people with poor credit. Since poor credit and poverty may go hand in hand, microloans don’t necessarily help lift everyone from poverty.
To read more about Kiva, people can visit their website. There are several other rising microlenders. These include ACCION USA, Lend for Peace, and CARE. Most loans do charge small interest rates, which fund continued lending or administrative costs.