Entrepreneurs everywhere will experience the frustrating issue of poor or no access to finance. For entrepreneurs in developing countries, the issue poses a huge barrier not just to their chances for individual development, but to those of entire communities and regions. Here, access to small credit can often be all that is needed to help people pursue a better future for themselves, their families and their communities. This organisations enables just that.
Based in San Francisco, Kiva is a non-profit crowdfunding organisation set up in 2005 to support entrepreneurs in some 80 countries through access to micro-loans. Their vision is a world “where all the people hold the power to create opportunity for themselves and others”.
Borrowers can apply for a loan either directly through the Kiva website, or through one of their field partners – these can be local microfinance institutions, schools, NGOs or social enterprises. An underwriting and approval process then starts, either through the field partners who will vet and approve the applications or, in the case of direct loans, trustworthiness is determined via so called ‘social underwriting’: that is friends, family or Kiva-approved Trustees vouch for the borrower.
The loan is then posted on the Kiva platform for lenders to support, and to fund in small incremental amounts of 25 USD. Indeed 25 USD is all that is needed to become a Kiva lender, and lenders can choose who to support according to a number of criteria, such as country, gender, individual or group, business sector and/or specific issues that the borrowers are trying to solve with their initiative, water sanitation, education, job creation, vulnerable groups being just a few.
Once a loan is secured, the borrower then repays it over time and based on his/her ability to pay and, crucially, at zero interest rate and no fees – this ensures that borrowers can use all of their proceeds as income and further investments, rather than interest repayments.
The repaid loan will go into lenders’ Kiva account, and lenders can choose to use the repaid money to either fund further entrepreneurs, donate or withdraw it. According to Kiva, the majority of lenders simply re-lend the money, therefore creating further positive ripple-on effects for borrowers and their communities.
The impacts of Kiva’s work can be seen on their website: their latest figures indicate that over one million loans have reached some two million borrowers in 84 countries, with some 600,000 borrowers in developing countries alone having benefited from the program.
And with 75 per cent of borrowers being female – such as Pablina in the photo above, who used her loan to build two booths to sell her corn and cornbread and be able to support her family – it is clear that the scheme is helping female entrepreneurs tap into their own transformational potential. Indeed studies have found that although women in developing countries are disproportionally represented in informal or low paid work, they reinvest 90 per cent of their income towards their children’s education and the wellbeing of their families; supporting female entrepreneurs therefore means greater development opportunities for all.
You can watch a clip about the initiative here: