Kiva is a legend in the world of international microfinance.
Since 2005, they have facilitated more than $100 million in microloans around the world, primarily to poor entrepreneurs in developing nations.
In 2009, Kiva announced that they would expand their services to include US-based small businesses.
This announcement was greeted with more than a little controversy. As an organization, Kiva has committed itself to financing the world's poorest business owners. Many felt that US entrepreneurs didn't have the same level of need as those in developing countries.
But the global economic downturn caused Kiva to reassess their position toward US entrepreneurs. When the financial markets deteriorated, traditional lending began to dry up, leaving even US entrepreneurs scrambling for sources of capital.
Microlending is a very unique form of business financing and Kiva has several characteristics that differentiate it from other microfinancing organizations. If you intend to explore microloan options with Kiva, here's what you need to know:
- Peer-to-peer lending. Unlike other microlenders, Kiva does not lend directly to their clients. Instead, they facilitate lending relationships between individuals and prequalified business owners. Literally anyone in the world can lend $25 or more to a Kiva entrepreneur and track their progress online. When the entrepreneur pays back the loan, the individual can take back their principal investment or reinvest it in another Kiva client.
- Field partners. Kiva relies on "field partners" to identify qualified clients and to disperse funds. Field partners are almost always microlending institutions with a proven track record of successful microloans. They possess the experience and expertise to be a valuable resource to both Kiva and business owners. Field partners are also instrumental in uploading entrepreneur stories to Kiva's online platform, which is the primary way Kiva attracts investment dollars from concerned individuals.
- Application process. Kiva does not accept applications directly from entrepreneurs. Instead, you will be directed to approach the closest Kiva field partner for information about becoming a Kiva entrepreneur. (See Kiva's field partner locator for the partner near you.) After you have been approved, your information and story will be posted to Kiva's website where your loan request will capture the attention of interested lenders.