Kiva to start micro-lending in the US

For those of you not familiar with Kiva it is a “microlender” that has developed an excellent reputation.. Along with partners in the field, that uses the power of ‘the community’ to provide microloans to people in third world countries. The loans actually come from people who join as members of Kiva and lend their own money (usually in $25 increments) to people who have been listed on the Kiva site.

Kiva collects the money gathered from all the people making these microloans and then deposits it with their partners in the field where the loan applicants live. It is these partners in the field who actually issue the requested loans and collect the loan repayments, which are then transferred back to Kiva. At this point when the original loan is repaid to Kiva the organization then returns the amount you loaned to you. At that point you can elect to make another loan to someone else or withdraw your money.

As an organization Kiva has been incredibly successful with a very low number of loans ever being defaulted on, and with people coming back for additional loans.

In light of the current economic situation in the US the “microlender” has decided to expand its lending operation into the United States. The expansion of services will kick of today and will let needy small businesses in the US vie for funding alongside other struggling entrepreneurs from places like Vietnam to Moldavia.

The US listings will start with about 45 businesses in Boston, New York, Miami, Atlanta and San Francisco.

Since 2005, Kiva has raised more than $75-million from 500,000 people and lent the money to about 180,000 entrepreneurs in 44 countries. About 98 per cent of the loans have been repaid on time, Shah said.

Although there is little doubt that the credit crunch is stifling the growth of U.S. small businesses, Shah said some of Kiva’s staffers remain convinced the loans are needed more in poorer countries.

“It will be interesting to see if someone from South Central Los Angeles will be able to get a loan on our site more quickly than a small business in south Sudan,” Shah said.

Source: The Globe Mail

As a side note I made my first Kiva loan the other night so it will be interesting to see how this all develops because I would prefer in some ways to help someone from down the street rather than on the other side of the world.