We started by familiarizing ourselves with everything regarding Kiva. We focused on learning about what microfinance is, the history of modern microfinance, microfinance institutions, and the microfinance impact and outcomes. We used this information to answer the question "Why don't banks serve poor people?" Then we researched costs, interest rates, and sustainability.
First off, microfinance is the supply of loans, savings, and other basic financial services. Kiva is using this concept of microfinance/microloans in order to help struggling entrepreneurs all around the world. Kiva is able to provide the money for these loans by small loans made on their website, www.kiva.org. In order to contribute to a loan anyone can create an online account on the Kiva website and with the easy click of a button and credit card information, someone can make a loan. Loans start at as low as $25 and the loans are paid back with 0% interest. The reason Kiva is able to make a difference is because these loans are able to help entrepreneurs in developing economies who are unable to support their ideas or businesses with a financial backing. Kiva is simply a way to connect people in developed economies to assist those who are in need of financial support easily. Without the assistance of Kiva's members thousands of entrepreneurs around the world would not be able to hold the power to create opportunity for themselves. The great part about Kiva is that 100% of every dollar you lend on Kiva goes directly towards funding loans; Kiva does not take a portion of the profits.
Some statistics about Kiva:
Since Kiva was founded in 2005:
1,038,876 kiva lenders
$516,238,900 in loans
99.00% repayment rate
Kiva works with:
237 field partners
450 volunteers around the world
73 different countries
Why don't banks serve poor people?
First off, microfinance is the supply of loans, savings, and other basic financial services. Kiva is using this concept of microfinance/microloans in order to help struggling entrepreneurs all around the world. Kiva is able to provide the money for these loans by small loans made on their website, www.kiva.org. In order to contribute to a loan anyone can create an online account on the Kiva website and with the easy click of a button and credit card information, someone can make a loan. Loans start at as low as $25 and the loans are paid back with 0% interest. The reason Kiva is able to make a difference is because these loans are able to help entrepreneurs in developing economies who are unable to support their ideas or businesses with a financial backing. Kiva is simply a way to connect people in developed economies to assist those who are in need of financial support easily. Without the assistance of Kiva's members thousands of entrepreneurs around the world would not be able to hold the power to create opportunity for themselves. The great part about Kiva is that 100% of every dollar you lend on Kiva goes directly towards funding loans; Kiva does not take a portion of the profits.
Some statistics about Kiva:
Since Kiva was founded in 2005:
1,038,876 kiva lenders
$516,238,900 in loans
99.00% repayment rate
Kiva works with:
237 field partners
450 volunteers around the world
73 different countries
Why don't banks serve poor people?
Formal financial institutions were not designed to help those who don't already have financial assets - they were designed to help those who do. So what do poor people do? Credit is available from informal commercial and non-commerical money-lenders but usually at a very high cost to borrowers. Some banks do provide savings services. Banks provide savings services such as savings services are available through a variety of informal relationships like savings clubs, rotating savings and credit associations, and mutual insurance societies that have a tendency to be erratic and insecure." However, the majority of formal banks do not provide microfinance products because microfinance is an expensive enterprise - one can make a lot more money on a large loan than a small loan, and you won't make much money holding savings accounts with very little funds in them. Banks can make more money if they only provide financial services to those who already have money.
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