John Rynne's weblog

Kiva is a site which enables you to provide microloans to people around the world who need start-up capital (mainly a few hundred euro) for a small business, such as a shop, or to buy agricultural implements or the tools of their trade.

I made a loan to an entrepreneur named Anna Popelnuk in Ukraine . She has a shoe shop.

It works like this:
People looking for finance post a photo and a description of how much they need to raise and what they plan to do with it. The borrowers are vetted by local organisations so it is not a scam.
You choose to lend to someone (minimum $25). The mechanics are handled by PayPal.
As the borrower repays, the money becomes available to lend to someone else.
You get regular updates about repayments and the borrower’s business progress.

Out of curiosity, I decided to look at the “dark side” of the idea: people who fail to repay. The site is very transparent and you can easily pull out a list of all the borrowers in default.

Interesting facts about defaulters on Kiva:

• Just over 200 borrowers have defaulted. That compares very well with over 13,000 people who have paid back in full and over 45,000 loans granted in total. Many banks would kill for that sort of loan-loss ratio!
• Interestingly, most of the listed defaulters paid back part of the loan (i.e. they didn’t just disappear with the money).
• From what I can see, most defaults are actually due to problems with the local organisation failing to fulfil Kiva policies (such as not passing full amount of loan to borrower), war (Gaza Strip), etc.

Consider joining Kiva – it sounds like an excellent way to contribute to economic growth in less fortunate areas of the world.