Kiva is a new web site that let’s you do something pretty amazing: fund an entrepreneur in the third world. I’m not entirely sure how this works yet, but I like what I see so far.
From what I can tell, Kiva has partnered with several small (micro) finance companies around the world that are local to the loan recipients. People needing a loan apply there, which get vetted and forwarded to Kiva. Kiva lets you put money towards the loan amount (as little as $25 regardless of the total load requested) and helps manage the payback process. You also get email notices about how the company you have funded is doing and how the payback is going.
This isn’t something you can make money off of. While the local finance companies charge an interest fee (which must be disclosed to Kiva for them to be a partner), Kiva doesn’t collect and none of the interest is passed on to Kiva users. You do get your original investment back, should the loan recipient pay back the loan (there is a chance they won’t, but all of the loans made through Kiva have been paid back at the time of this entry, according to their web site).
I like the idea of people pooling their relatively limited wealth to help out someone trying to get on their feet somewhere else. I’m not poor by most standards and am wildly rich compared to most of the people in the world, but I still don’t make that much compared to other Americans. But here, I can take a little bit of my wealth and help a fellow out thanks to a good use of technology and some really good thinking from a couple of passionate people.
Does it get better? Probably, but this is pretty damn good.
2 Comments
In most cases, the amounts needed for such enterprises are very low. Like enough to buy a few livestock or supplies and many times the people given the loans pay them back as quickly as possibly. what is ultimately does is give the people who need the biggest breaks in the world financially the ability to take a small loan and start a small business like selling eggs in their village or jewelry at the local bazaar to help them start earning extra income to help improve the quality of their lives. Most times the loans are small ($25-100) depending on where they are at. So I think of it as people with plenty finding a real way to give people money in a way that can drastically improve their quality of life by giving them a vocation and a practical way to build a small business to sustain a basic standard of living.
Seems like most of the businesses were asking for $500 to $1000 US. Doesn’t seem like much, but when you think about the countries these folks live in, that’s a small fortune.
I think the thing I’d be concerned about at that stage is the ability to pay it back. Not saying they aren’t trustworthy, but it would take me all my life to payback a million dollar loan (if I ever finished paying it back). Most Americans spend a few decades paying off their house at $400K.
I’m not worried about not getting my money back. It’s $25, no big deal. But I am concerned about having someone in debt to me that couldn’t pay me back easily even if the business took off. I’d have to learn more about how the program works in that regard before going ahead with participating. It’s probably a small question, but a question none the less.
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