Kiva loan :)

[cosmosgrove]

Aww my 14 year old son just happily paid for a Kiva loan out of his own money. I suggested it to him after showing him the one I did last night and he didn't hesitate to say yes.

Just a little bit proud that he did that :-x

[thecatspjs]

Yes, lets aim for 500 -

... gosh some work to do though.

Be great to get a few more new team members from the boards.

Off to make a couple of loans now as I have had some repayments and had a good sales week so will add some funds too.

[thecatspjs]

Gosh $9200 loaned through 366 loans ~ $10,000 well in sight

[rabbitearbandicoot]

 I've just been reading about this.

The organization's net assets in 2012 totaled $16,248,638. Kiva itself does not charge interest rates on its loans; they supply capital to microfinancing institutions for free. These microfinancing institutions then lend out money with very high interest, averaging over 30%.

So, the borrower has to pay 30% interest? Is that right?

[j*oono]

Everything you need to know here, Rabbit.

http://www.kiva.org/help/interestRateComparison

1. 
   Field Partner interest rates are a highly affordable alternative to the local money lender
   
   
   • Local money lenders - often the only option for poor entrepreneurs to get a loan - charge interest rates ranging from 60% to 800% annualized.
   
   
   • A poor entrepreneur can generate greater benefits from additional units of capital than can a highly capitalized business, because she or he begins with so little.
   
   
   • According to the World Bank, studies covering India, Kenya, and the Philippines found that the average annual return on investments by microbusinesses ranged from 117 to 847 percent.
   
   
   

1. 
   The costs of making a micro-loan in the developing world are higher versus larger loans in the West.
   
   
   • Cost of screening - Field Partners must screen entrepreneurs who commonly have no credit history, no collateral, are frequently illiterate, and often live in remote areas. To responsibly assess the credit worthiness of each entrepreneur, the cost is higher than the West where most everyone has a credit score and screening / loan application can be done electronically.
   
   
   • Cost of in person collections - Field Partner staff typically travel to each entrepreneur on a monthly basis to make collections. Compared to the West, where mail and internet repayments are standard, the costs are higher.
   
   
   • Cost as a size of the loan - If the Field Partner's actual cost per loan is $25, the percentage cost is 0.25 percent for a $10,000 loan, but 25 percent for a $100 loan.
   
   
   

1. 
   Field Partners must charge an interest rate that allows them to pursue their social impact agenda sustainably.
   
   
   • In order for Field Partners to reach more of the poor with relatively low interest loans (vs. local money lender), they need to cover their costs.
   
   
   • Given the higher costs of microloans discussed above, Field Partners must charge a sufficient interest rate.
   
   
   • Kiva aspires to provide transparency around the social impact and relative Field Partner interest rates in order to ensure to reward Field Partner that successfully create social value while lowering their costs to do so.

[j*oono]

So did that answer your question Rabbitearbandicoot?

[rabbitearbandicoot]

---

@j*oono wrote:

So did that answer your question Rabbitearbandicoot?

---

Brilliant idea - the person who thought this up I mean.

[rabbitearbandicoot]

let's see if I have it right.

A person applies for a loan - let's take 

Las Propias Originales Group

applied for $4,200 currently $2,225 to go. What does the 'only 2 hours 12 minutes left' mean?

Obviously not enough people have given their $25 to them - is that right?

What happens if it runs out of time before reaching the funding goal?

[j*oono]

Quite often you will find that the borrower has already been loaned the money by the field partner, and although you are lending to the borrower, what you are really doing is backing the field partner.  Most loans seem to fill.  If they don't (never has happened to me) then your money goes back in your account and the field partner takes the loss.

The risk to you is if the loan is filled, but the borrower is unable to make the repayments.  That has also not happened with any of my loans so far but it is quite possible in war zones especially.

I'm going to double check on these facts but that is how I remember reading about it.

[j*oono]

A bit of a longer read from Kiva here.

http://www.kiva.org/updates/kiva/2012/08/13/qa-expiring-loans-credit-limits-and-the-evolution-of-kiv...

Just one snippet -

"As we explained in #9, Field Partners bear the brunt of expirations. If a loan is pre-disbursed, the Field Partner has to fund it out of its own reserves. The impact is minimal if the borrower pays the loan back in full. But, if the borrower doesn’t pay back the loan and the loan has expired on Kiva, the Field Partner must cover the loss out of its own pocket. This may be a rare occurrence, but it can have a negative impact on a partner depending on its size and financial stability."

[azureline**]

I have never experienced a defaulted loan.

I have enough repayments to fund another, will do it today.