January 7, 2008

  • If your $25.00 could change someone's life for the better, would you loan it to them?

    That's the basic premise behind Kiva, a microloan organization. They facilitate microloans to entrepreneurs in developing countries. Check them out at http://www.kiva.org. The best way to describe it is through an example.

    Ni Komang Murni is a farmer in Indonesia. She needs a bull (male cow) in order to harvest her crop. She is asking for a $500 loan in order to purchase a bull, and double her harvest output. She is hoping to use the increased harvest and income in order to pay for her two pre-school children's schooling when they start.

    A field partner evaluates Ni Komang's needs and determines the level of risk of the individual. For example, a person that has experience on a farm is less risky than someone that is new to the farm. In this case, the field partner considers Ni Komang a low risk person, takes her picture, and goes back to their office to upload her picture and story.

    Someone else on Kiva may see the post and loan them money, in $25 increments. Why only $25? According to Kiva, they have so many donors, that $25 is all it takes, and they can have a person fully funded in 3.9 hours. I also think that $25 is not an unreasonable amount to loan out.

    I also want to emphasize that it is a loan. These people pay back the loan! Sure it may take a year, but Kiva boasts a 100% repayment rate. No body has ever defaulted. These are individuals that really use the money positively and appreciate the loan so much, they ensure that the amount is paid back within the designated time.

    Go ahead. Make a loan. Change a life.