Everything You Need to Know about Kiva

Kiva was established with the aim of creating a more financially inclusive world where everyone has the power and resources to improve their own lives. In this article, we look at the vital work of this international nonprofit, which provides vital funding to entrepreneurs through a unique financing model.

Kiva was founded in San Francisco in 2005.

From tuition fees to business loans for women and agricultural loans, Kiva provides vital funding through crowdfunded microloans. The financial platform provides capital for individuals in underserved communities around the world. It lowers the cost of financial services and also addresses barriers to financial access for these entrepreneurs.

Kiva enables anyone with an internet connection and some extra cash to become a lender. By funding as little as $25, Kiva lenders can make a real difference in people’s lives, fueling growth and social mobility in communities with few economic opportunities.

Every cent lent via Kiva goes to funding loans.

Kiva follows a simple, straightforward loan process:

1. The borrower completes the loan application.

2. The loan is underwritten and approved.

3. The loan is posted on the Kiva online platform, inviting lender support.

4. A fundraiser is started, enabling lenders to crowdfund in increments of $25 or more.

5. The fundraiser is completed and the borrower receives the loan monies.

6. The loan is repaid.

7. Lenders can withdraw repaid funds, donate them, or use them to fund new loans.

Kiva loans have a repayment rate of around 97%.

This number can fluctuate, and Kiva does not guarantee loan repayments. Still, this high rate of repayment is an indication that Kiva loan recipients are dedicated to repaying the money they receive—despite their relative poverty.

Since the loans are crowdfunded, individual lenders can contribute as much or as little as they wish to help a particular borrower reach their goal. The platform is fully transparent. Lenders can find out which other lenders have supported a particular borrower by viewing the borrower’s loan profile.

More than 1.7 billion people worldwide lack access to vital financial services.

Kiva works with an extensive network of local Field Partners, who explain the loan process to borrowers, helping them to complete and upload loan applications. Field Partners are local organizations working in communities to vet loan applications and administer loans. Kiva Field Partners include schools, nonprofit organizations, social enterprises, and microfinance institutions. Many provide additional services besides helping clients access Kiva loans, such as adult literary and entrepreneurial skills education.

Direct loans from Kiva are also available to businesses in the United States and social enterprises around the globe. These loans aren’t mediated by a Field Partner.

Kiva loans have modest interest rates.

Kiva loans facilitated by a Field Partner charge a modest rate of interest, to cover the many expenses involved in providing loans in developing markets, particularly in rural regions. In addition, many Field Partners supply supplemental services, such as financial literacy classes, training, and even health services. Kiva requires all Field Partners to make full disclosure of any applicable interest rates, and will not work with organizations charging unreasonable rates. Kiva works only with organizations that are committed to serving the poor, underserved, and unbanked. Most of Kiva’s direct loans, in contrast, charge 0% interest.

Kiva crowdfunds loans in 77 countries worldwide.

Many individuals who borrow from Kiva have no alternative source of fair, affordable credit. In the United States, Kiva provides loans to the many people who are financially excluded from bank loans, as well as to borrowers who are committed to creating social impact within their local communities.

Loans support students, artisans, builders, farmers, restauranteurs, and shopkeepers around the globe. Many people who borrow from Kiva work multiple jobs in order to generate enough income to support their business and their families.

To date, Kiva has crowdfunded more than $1.4 billion in loans via 1.8 million lenders. The organization has facilitated funding for 918,281 farmers, helped 218,000 borrowers gain access to clean energy, and approved 66,416 educational loans. Notably, Kiva has provided loans to 282,126 borrowers living in conflict zones where access to funding is scarce or nonexistent.

Kiva enables its supporters to choose where they make an impact.

Whether they wish to fund friends in their local community or someone in a village on the other side of the world, Kiva lenders provide funding that changes lives. Via the Kiva website, lenders can view pictures of the person they choose to lend to and learn how their money will be used. In this way, Kiva loans create connections and relationships.

By facilitating loans rather than donations, Kiva provides a powerful, sustainable method for lenders to create social and economic good that maintains the mutual dignity of both the lender and the borrower. Lenders can earn money by making a real difference in the world, and borrowers are empowered as entrepreneurs. The investment they receive can jumpstart a local economy. 

Loans to women

Even today, women typically have less access to affordable, fair credit, even in developed countries. While approximately 46% of male entrepreneurs enjoy access to financial services, just 27% of women enjoy the same funding opportunities to establish and grow their business. Kiva aims to address this inequity by providing women with the same business funding opportunities.