Advertiser Disclosure
X

Advertiser Disclosure: The credit card offers that appear on this site are from credit card companies from which MoneyCrashers.com may receive compensation. This compensation may impact how and where products appear on this site, including, for example, the order in which they appear on category pages. MoneyCrashers.com does not include all credit card companies or all available credit card offers, although best efforts are made to include a comprehensive list of offers regardless of compensation. Advertiser partners include American Express, Chase, U.S. Bank, and Barclaycard, among others.

By

Dig Deeper

Become a Money Crasher!
Join our community.

Kiva Microfinance Loans – Consider Loaning Money to Entrepreneurs in Developing Countries

At a Glance
kiva logo
0.0 / 5
Rating

Kiva lendeeMeet Esthere Uwamahoro. She’s 33 years old, married with two children, and lives in Kigali, Rwanda. She’s in the spare parts business, and she needs some help.

In short, she needs a micro-loan to help expand her business. Her hope is that if she has the money to buy more spare parts, she’ll have a wider selection to offer her customers. She wants her business to be successful so that she’ll be able to make more money for her family.

Normally, 99.99% of us would never hear about Esthere’s plight. How could we? We’re half way around the world.

Fortunately, thanks to Kiva, we can hear her story. Further, we can help by loaning her the money.

Kiva: Redefining Charity

kiva logoYou know that old saying, “Give a man a fish, and he’ll eat for a day. But teach him how to fish, and he’ll eat for a lifetime?”

Well, that’s the philosophy behind Kiva. Kiva’s goal is simple: to connect people who have money, and are willing to lend it, to people living in poverty who desperately want to start or expand a business, but have no funds to do it. This is especially important because unlike the US, small business financing and capital aren’t easily accessible in developing countries.

The idea is brilliant. After all, the best way to alleviate poverty is to help people stand on their own two feet. Instead of feeling powerless, Kiva helps restore people’s dignity, their sense of self-worth, and their respect.

Kiva works because all the money we give is loaned out to entrepreneurs in developing countries. They use this money to open grocery stores, buy farm animals, or start small clothing shops. They buy fertilizer for their crops, add a well to a home garden, or even buy product for their stores.

Plus, 81% of all loans made through Kiva go to female entrepreneurs.

The key word here is loan. The money we send through Kiva is repaid 98% of the time. That repayment rate is astonishing.

How Kiva Works

Kiva works with thousands of micro-finance institutions around the world (Kiva calls them Field Partners). These Field Partners are located in Mongolia, South Africa, Lebanon, Peru, and pretty much anywhere else you find people living in poverty.

Any entrepreneur who needs a micro-loan will go to his or her closest Field Partner institution and apply for one. The Field Partner creates a repayment contract (which usually includes a mandatory savings clause) and then uploads the story and pictures to Kiva.

Then, lenders like us browse the stories, pick one that speaks to our heart, and make a loan. Loans can range from $25, or we can choose to fully fund the loan (which happens much more than you might expect!). Below is an example listing from the Kiva site.

kiva example listing

Once the loan has been made, it’s up to the Field Partners to collect the payments on that loan and send it to Kiva, who then sends it back to us.

Everyone wins here: we get to help someone who really needs it (i.e. good stewardship); the entrepreneur starts a business and improves his or her life; a family prospers; and we get our money back, which we can then loan to someone else if we choose.

The Most Amazing Part

Kiva is incredibly popular – and it’s really inspiring. Want proof?

When I first read about Esthere, she needed around $400 to complete her loan. I just went back to check on her profile, and now she only needs $325. Hopefully by the end of the day, her loan will be fully funded and she can go expand her business.

Last week, I went to Kiva to make a loan to someone, and something even more incredible had happened. There was not a single person on the site that needed a loan. 100% of the entrepreneurs had been fully funded, and the Field Partners hadn’t had a chance to get any new stories up on the site.

Incredible.

If you’re worried about Kiva being a legitimate charity, don’t sweat it. Charity Navigator has given Kiva a 4-star rating, which means it’s a charity you can trust.

Final Word

Kiva is a wonderful charity because the organization is truly helping change people’s lives. When you give through Kiva, you’re helping someone better his or her life in a way that will last. And, you get your investment back.You’re not just giving, you’re loaning.

It’s easier to fit giving into your budget with Kiva because your loan comes back. You can then choose to put the money back in your bank account, or you can choose to pass it on to someone else who needs it. Having just $25 or $50 floating through Kiva can help dozens of people around the world. This is why Kiva is one of my favorite charities.

Have you ever loaned money through Kiva? If so, who did you help? Did your loan get repaid?

Verdict
kiva logo
0.0 / 5
Rating

Editorial Note: The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author's alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Heather Levin
Heather Levin is a writer with over 15 years experience covering personal finance, natural health, parenting, and green living. She lives in the mountains of Western North Carolina with her husband and two young sons, where they're often wandering on frequent picnics to find feathers and wildflowers.

Comments Disclosure: The below responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

  • Next Up on
    Money Crashers

    Amazon Shopping Credit Cards

    15 Best Credit Cards to Use When Shopping on Amazon Prime Day 2019

    Amazon Prime Day is upon us. Is your wallet optimized to capture once-in-a-year deals at the lowest possible net price?If you’re not carrying at least...
    Amazon Prime Rewards Credit Card

    Amazon Prime Rewards Visa Signature Card Review

    The Amazon Prime Rewards Visa Signature Card is a cash back credit card exclusively for Amazon Prime members. Built for regular Amazon.com and Whole Foods Market shoppers,...

    Popular on
    Money Crashers

    Sign Up For Our Newsletter

    See why 218,388 people subscribe to our newsletter.

    What Do You Want To Do
    With Your Money?

    Make
    Money

    Explore

    Protect
    Money

    Explore

    Save
    Money

    Explore

    Borrow
    Money

    Explore

    Manage
    Money

    Explore

    Invest
    Money

    Explore