Kiva Lends Money to Businesses in the U.S.

Kiva gives microloans to entrepreneurs

Since its inception, microlender Kiva has been known for giving online loans to help entrepreneurs start businesses in third-world countries. As of today, however, The Associated Press reports:

Kiva.org has spent the past 3 1/2 years raising money on the Internet to finance destitute entrepreneurs in 44 impoverished countries. Now in a sign of the economy’s spreading despair, the online “microlender” is reaching out to low-income entrepreneurs in the United States.

What is a microloan?

The term “microloan” has always been used to describe a loan that is given to an impoverished person or business. This is because microloans, as the name implies, are very small loans. According to Wikipedia:

Microcredit is the extension of very small loans (microloans) to those in poverty designed to spur entrepreneurship. These individuals lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit. Microcredit is a part of microfinance, which is the provision of a wider range of financial services to the very poor.

Why lend to U.S. entrepreneurs?

Kiva says its decision to start lending to U.S. entrepreneurs was simply part of a natural progression. Kiva’s blog says:

Our desire has always been to be a truly global organization, and to allow individuals anywhere in the world to make loans anywhere else in the world. Kiva believes that poverty exists in many forms throughout the world and that we can play a part in helping alleviate that poverty by allowing people to lend through our website.
Therefore, to be a truly global organization, Kiva is expanding into microfinance markets in the developed world. Since over 70% of our lenders are currently from North America, the United States was a natural first choice.

More about Kiva

So, as of today, Kiva lends to entrepreneurs in 45 countries, including the U.S. Already United States entrepreneurs in the catering, child care, retail and transportation businesses yet that have started raising money through microloans from Kiva, and they’ve made significant progress toward their goals.

So who is Kiva? Well, it could be you. Kiva’s web site says:

Kiva is the world’s first person-to-person micro-lending website, empowering individuals to lend directly to unique entrepreneurs around the globe.

So, whether you’re trying to get your business off the ground or you want to help poor entrepreneurs start businesses, Kiva makes it easy. If you are seeking a microloan, you can register at the Kiva web site. If you want to help an entrepreneur, the web site has a simple how-to guide:

1) Lenders like you browse profiles of entrepreneurs in need, and choose someone to lend to. When they lend, using PayPal or their credit cards, Kiva collects the funds and then passes them along to one of our microfinance partners worldwide.

2) Kiva’s microfinance partners distribute the loan funds to the selected entrepreneur. Often, our partners also provide training and other assistance to maximize the entrepreneur’s chances of success.

3) Over time, the entrepreneur repays their loan. Repayment and other updates are posted on Kiva and emailed to lenders who wish to receive them.

4) When lenders get their money back, they can re-lend to someone else in need, donate their funds to Kiva (to cover operational expenses), or withdraw their funds.

Micro means micro

It should be noted that when Kiva says it is seeking small loans, it means really small loans. As in $25. Right now, entrepreneurs in Viet Nam and Peru are looking for microloans to help with raising pigs and growing fruits and vegetables.

You can help. Here are a few examples of entrepreneurs seeking microloans through Kiva:

• Nguyen Thi Hai from Viet Nam needs $725 for her grocery store
• Karen Elizabeth from Peru needs $275 for her cosmetic sales business
• Giovanna Andrea Mendez Apaza needs $800 for her clothing sales business