Kiva Green Loans are intended to help individuals in low-income countries make eco-friendly changes, such as installing solar panels. Image: Flickr / theregeneration / CC BY-SA

In 2008, a small person-to-person lending company called Kiva launched. The person-to-person lending company has now added green loans and student loans to the financing portfolio. With these new products, Kiva hopes to hit $1 billion in microloans lent by 2015.

The basics of Kiva

Kiva was the first major online microloan site. The nonprofit organization matches investors with entrepreneurs and individuals who need small loans. Usually loans through Kiva are for amounts between $100 and $500, and the repayment rate is incredibly high, between 90 and 98 percent. Currently, Kiva members loan about $1 million every five days. Kiva is the only not-for-profit microlender, though there are other lenders who offer bad credit loans and microloans for a profit. There are borrowers in 59 countries that have used Kiva loans, mostly in low-income countries. Kiva also allows some loans in the U.S. , but not every type of loan.

Kiva adds green loans to lending options

In addition to the small-business loans and personal loans , Kiva now offers green loans. These loans are intended to be used for projects such as solar power, drip irrigation, converting farms to organic production and the creation of biofuels. The criteria for these loans remains the same as every other Kiva loan, and the investment amount also remains the same – $25 increments. Green loans can be personal or business-based and have the same repayment terms as every other loan offered on the site.

Student lending through Kiva

In three countries, Kiva is now also offering student microloans. Students in Bolivia, Paraguay and Ecuador are now able to get student loans through Kiva lenders. Students are given one to three years to pay back their loans, and lenders can track the progress of the student all the way to repayment. The program is stil considered to be in pilot status, but appears to be doing well.

The growth of microfinance

Prosper, Lending Club and several other microlending services launched at the same time as Kiva, in 2008. The Securities and Exchange Commission shut down these for-profit companies for not registering properly. These companies are mostly back up and running, properly registered. Microlending companies are starting to cut into the business of big banks and credit cards. These microloans are still relatively new, but as long as there is a market for small-dollar credit extended to individuals that may have bad credit, financial innovation in that industry will continue.

Sources

Kiva Green
Slate.com

The Nordstrom Rack Groupon has almost crashed their site. Image: Wikimedia Commons

This morning, the national deal from social coupon site Groupon was half off a purchase at Nordstrom Rack. The Nordstrom Rack deal has caused the Groupon site to incorrectly function intermittently today. Groupon is becoming more popular, but that doesn’t always mean it’s good for business.

The Nordstrom Rack Groupon

The Groupon offered this morning was more than just 50 percent off at Nordstrom Rack. In addition to getting a $50 certificate for Nordstrom Rack for $25, the coupon site also offered a Kiva deal. First given out by Oprah, the Kiva deal that donates $25 in the user’s name on the microfinance site for $15 is proving very popular. These two popular deals are causing problems on the Groupon site. The Groupon Twitter this morning said “Hang in there, everyone: big things are afoot at Groupon.com today and we apologize for the site being so slow. We’re on it. Updates soon…”

Benefits to Nordstrom Rack

Nordstrom Rack, a discount retailer, could easily see several hundred thousand coupons sold through Groupon. A similar deal The Gap offered in August sold more than 440,000 vouchers. The Nordstrom Rack coupon will be offered through the weekend, so the usual daily time limit won’t exist for the Nordstrom Rack deal. Groupon takes about half of the cost of most of the deals on their website. This means Nordstrom Rack is getting about $12 on every $50 spent at their discount store with this Groupon — definitely less than they could get with a payday loan no faxing.

The effect of Groupon on small businesses

For big businesses like Nordstrom Rack, Groupon can be a great way to get customers into stores. Small businesses and local businesses, however, do not always have great experiences with Groupon. When Groupon deals are worth less than $7, Groupon keeps the whole amount customers pay for the Groupon. For small businesses, this means losing a significant amount of money on advertising that may or may not earn them a lot of money. There are options other than Groupon for businesses smaller than Nordstrom Rack, though. LivingSocial, Tippr, 8Coupons, and TheDealPlanet are all smaller, locally based group coupon options.