Kiva – Loans to Artisan Entrepreneurs
Kiva is a non-profit that uses crowdfunding to make loans to artisan entrepreneurs. Crowdfunding is the practice of funding a project by collecting many small loan amounts of money online from a large number of individual lenders. As an artisan – living outside of the United States – you would apply not to Kiva but directly to one of their Kiva Field Partners for the loan. Kiva Field Partners screen borrowers, post loan requests to Kiva for funding, disburse loans on the ground and collect repayments. Depending on the type of loan, either a Field Partner or the borrower uploads the loan details into the system. Kiva volunteers help to edit and translate loans before they go live on the website for lenders to crowdfund. A list of Kiva’s Field Partners, including the countries they work in and their contact information can be found towards the bottom of this page: kiva.org/about/where-kiva-works
Kiva itself never collects interest on loans, but most Kiva Field Partners do charge fees and interest in some form, “however Kiva will not partner with an organization that charges unreasonable interest rates and we require Field Partners to fully disclose their rates. In addition, Kiva partners only with organizations and microfinance institutions that have a social mission to serve the poor, unbanked and underserved.” The loans vary in interest rates, loan amounts and requirements such as mandatory savings and/or security deposits. Before accepting a loan, please determine if the Field Partner’s fees, interest rate and mandatory requirements are acceptable. A few Partners do not charge any interest. The Alliance for Artisan Enterprise is one Field Partner that offers loans at a 0% rate.
Interest rates are usually conveyed as an Annual Percentage Rate APR, but Kiva displays Portfolio Yield (PY), which is equal to a Field Partner’s financial earnings divided by its average loan portfolio outstanding during a given year. It is important to note, “Although there’s a strong correlation between Portfolio Yield and APR, in some circumstances Portfolio Yield underestimates borrower cost, mostly because it does not account for the cost to borrowers of mandatory savings and/or security deposits.”
Random Sample of Lender’s and Their Rates:
Approved to post Kiva loans from: Pakistan
Average Cost to Borrower: 36% PY
Hattha Kaksekar Limited (HKL)
Approved to post Kiva loans from: Cambodia, Thailand
Average Cost to Borrower: 23% PY
Approved to post Kiva loans from: Ghana
Average Cost to Borrower: 67% PY
Approved to post Kiva loans from: Senegal
Average Cost to Borrower: 20% PY
Paglaum Multi-Purpose Cooperative (PMPC)
Approved to post Kiva loans from: Philippines
Average Cost to Borrower: 41% PY
After you’ve been approved for a loan the process goes into the fundraising period when individual lenders crowdfund the loan in increments of $25 or more. Usually, loans on Kiva have 30 days to successfully fundraise. “In most cases, if a loan doesn’t fully fund on Kiva the individual borrower is not directly affected. Lenders who contributed receive their money back in their Kiva accounts and usually the Field Partner uses its own reserves to pay for the loan.”
If the loan successfully funds on Kiva, the crowdfunded money is used to provide the loan amount, and when the borrower makes repayments they’re paid back to the specific Kiva lenders who supported the loan.
For most loans on Kiva, the local Field Partners are responsible for distributing the funds to borrowers. Depending on the Field Partner, the funds may be given to each borrower before, during or after the individual loan is posted on Kiva.
Kiva’s local Field Partners collect repayments from the borrowers, based on each loan repayment schedule and the borrower’s ability to repay.
If you have questions you can find the Field Partner that funds loans in your area here (look toward the bottom of this page) and contact them directly for answers.
Interested in Funding an Artisan Entrepreneur’s Loan?
Anyone can be a lender on the Kiva platform. Kiva lenders do not receive interest from loans they support on Kiva.
If you are interested in lending as little as $25.00 go here to find a borrower you would like to support: https://www.kiva.org/lend?gender=female&queryString=artisan.
It’s not a donation. It is a loan. When you are repaid you can either collect the sum or re-loan the amount.
If the loan successfully funds on Kiva, the crowdfunded money is used to provide the loan amount, and when the borrower makes repayments they’re passed back to the lender who supported the loan. If a loan doesn’t fully fund (or reach 100%) when it’s posted on Kiva, Lenders who contributed receive their money back in their Kiva accounts
Field Partners collect repayments and the repayments are deposited into your individual Kiva lender account. Lenders should be aware as this introduces a layer of risk: repayment of Field Partner loans relies on the borrower repaying the Field Partner, and the Field Partner repaying Kiva.
As you’re repaid you can withdraw your money, donate it to Kiva, or relend it to another borrower.
Kiva is an international nonprofit, founded in 2005 and based in San Francisco, with a mission to connect people through lending to alleviate poverty. We celebrate and support people looking to create a better future for themselves, their families and their communities.