Posted on June 10, 2009 - by Nate

Kiva brings MicroFinance Lending to the People

I just picked up an article of great interest to me on TechCrunch. Specifically because I was involved in the MicroCredit, MicroFinance Club while an undergrad at Brigham Young University. The concept of MicroFinance was originally brought about my Muhammed Unas, who later received the Nobel Peace Prize for his efforts. 

Someone new is coming to this space. The organization is called Kiva. The TechCrunch article has some great info on the company and their efforts in MicroFinance: 

Kiva is a peer-to-peer lending site that facilitates micropayment loans between citizen lenders and extremely low-income entrepreneurs in developing countries. Through Kiva’s platform, anyone can loan $25 or more to support an entrepreneur and the specific progress of the loan can be tracked from initial funding to repayment. Upon receiving repayment, lenders can withdraw their funds from Kiva or lend again to another entrepreneur, thereby continuing the lending cycle.

In April alone, Kiva members loaned $4.5 million to entrepreneurs, a 56 percent year-over-year increase and a record month for Kiva. Since the microfinance platform’s birth in 2005, over $75 million has been loaned through Kiva.org to support more than 180,000 individuals from 44 developing countries. Kiva’s president, Premal Shah, says this new initiative to include U.S. businesses increasingly made sense as the financial markets deteriorated and traditional lending began to dry up even in the U.S.

According to Kiva, small businesses represent more than 87 percent of all businesses in the United States, and, on average, these micro-enterprises are responsible for 900,000 new jobs created per year according to the Association for Enterprise Opportunity. This number seems small to me but the impact of small businesses on job creation is clear. To make matters worse, Kiva says more than 10 million business owners faced difficulty obtaining capital—even before the credit crisis and economic slowdown.

I have always loved the concept and think it is a great way for developing nations to contribute to the impoverished countries around the world. It has that “feel good,” “philanthropic,” “altruistic” feel to you it. I can imagine that as an organization, these folks will do fine.