NWA-PCUG Newsletter Article, July 2009
Kiva – Online Micro Loans to Needy Entrepreneurs
By Ira Wilsker, APCUG Director;
Columnist, The Examiner, Beaumont, TX; Radio & TV Show Host

Iwilsker@apcug.net
(click to email author)

WEBSITES:
http://www.kiva.org

For the last several years I have written about the interactions between the computer and its user. I have written about both the very good and the very bad in cyberspace, probably with the edge in articles towards those cyber threats that gnaw at our heels. Despite our economic problems, high unemployment, industrial bankruptcies, and other devastating issues impacting us both individually and as a nation, perhaps it is time for all of us to take a moment and help those around the globe less fortunate than us. We have all seen the infomercials about starving children around the world and how we can help with donations, but what had been lacking is a massively organized effort to help those struggling entrepreneurs who just need a small hand up in order to create or expand their very small businesses. This is where Kiva comes in.

Kiva (http://www.kiva.org) is a 501(c)3 nonprofit organization whose function is to connect needy entrepreneurs around the world to a source of micro loans. According to its website, “Kiva is the world's first person-to-person micro-lending website, empowering individuals to lend directly to unique entrepreneurs around the globe.” Kiva acts as a conduit and coordinating clearing house that puts groups of individuals who are the lenders with needy small businesses around the world. This is an excellent way to help the working poor pull themselves up the economic ladder, and better provide for their families. It is important to note that these are very small loans which are likely to be repaid in a matter of months, and not gifts or grants. Lenders may withdraw the repaid funds, or re-lend them to another entrepreneur, as they see fit.

Kiva works with existing institutions and micro-lending organizations who administer the loans in impoverished communities all over the world. All of the individuals listed on the Kiva website are real people with real needs. The lenders are private individuals, church groups, scout troops, families, school groups, and others who would like to help those in need by loaning them small amounts of money for explicit purposes. Kiva lists almost 7000 groups or teams who collaboratively support Kiva and entrepreneurs in need. Some of the teams have made thousands of loans, and provided hundreds of thousands of dollars in loans. Most of the teams have open membership, and joining a team is simple, or the lender can remain independent.

The process of making micro-loans, and getting repaid is relatively simple. First, the user should register as a lender on the Kiva website to establish his account. The lender can browse the profiles of those in need of small loans and choose a recipient. The amount loaned is up to the lender, but in browsing the existing recipients, amounts as small as $25 are not unusual. The loan is aggregated with other lenders who selected the same recipient until the designated total is accumulated. Money can be transferred to Kiva via PayPal or credit card. The proceeds are passed to one of the microfinance partners who works in the borrower’s country, and the loan is made to the recipient. In addition to the loan, the microfinance partners, themselves nonprofit organizations, provide training and other assistance to the recipient in order to increase his chances of success. The recipient repays the loan to the microfinance partner, who forwards the proceeds to Kiva. The original lenders are notified by email that payments have been received and credited to their accounts. The lenders can then freely choose to withdraw their money, loan the balances to someone else in need, or make a donation to Kiva to cover its operating expenses.

Needy entrepreneurs can be sorted by gender, sector (type of business), region, and by popularity. Once a page is displayed, a photo of the individuals that meet the selected criteria is shown, his name and type of business, loan information, country and microfinance partner, and a brief biography of the individual. Clicking on the name of the individual will open a full page with information on the individual, the loan status (amount raised and still needed), how funds will be used, details on the microfinance partner, repayment schedule, and information on the country.

Kiva has become a popular website providing loans to many in need. As I type this, the weekly statistics for Kiva are 14,792 lenders made a loan, 3494 new lenders joined Kiva, 2753 entrepreneurs were funded, and over a million dollars in loans were made. At present, some individual is making a loan at the rate of once every 20 seconds. New recipients are added as frequently as hourly, and fully funded recipients are moved from the “Fundraising” category and placed in the “Raised” category. According to Kiva, as I type this, 49,418 recipients have repaid in full, 56,297 loans are currently being repaid on schedule, and 1992 recipients are behind in their payments or in default. These statistics are positively impressive, as to the low rate of late payments or defaults which would make many of our commercial bankers jealous!

Personally, I have made several loans to a few working poor in the geographic region that my grandparents are from. So far, the borrowers have all been paying off the loans as scheduled, and I am accumulating the receipts in my account with the intent of making additional loans, along with a voluntary contribution to Kiva to keep them in operation. Kiva has gift certificates available which allows the recipient of the gift certificates to use them as he sees fit to make loans to needy entrepreneurs of his choice.

Kiva is a good organization with an excellent purpose and track record. For as little as $25, computer users can make loans to budding business people, and make a positive change in the life of a family in need. Join Kiva and help someone; it will make you feel good.

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