Lending without banks, facilitated by the internet, is a radical development for borrrowing. So was microfinance, the idea of lending small amounts of money to the poor. Put the two together, and you get de-institutionalised micro-loans, those with a little extra money making small loans to those with no access to capital. You get kiva.org
Working through existing microfinance networks, Kiva profiles entrepreneurs on their website, with information about the people involved and their business ideas. Prospective lenders can then select a business to support, make a loan, and are kept them up to date with progress. Over 6-12 months, the lender either gets their money back or re-loans it to someone else.
To test out the site before I recommended it to you I just made a loan to a Nigerian market trader called Monday Nwanfor, so he can buy rice and beans for his business. It took about three minutes to do through Paypal. So far repayment rates are over 99%, but so that nobody loses their money if something does go wrong, the loans are distributed across a large number of donors. I’ve just put in a percentage of what Monday needs – if you’d like to top it up, check out his page and make an offer.
So far Kiva has distributed over $19 million in this way, through thousands of supporters. The non-profit organisation was started by Matt and Jessica Flannery in 2005, and it’s come a long way in a short time. See the interview with them below for more on their story.