Help Fund A Small Business By Using Kiva

While we often talk about seeking funding from investors or by bootstrapping our startups, we must remember that not everyone in the world has the same luxuries as us in terms of funding. There are perhaps millions of new businesses emerging around the world, but while many are promising, they may eventually stumble into oblivion because of lack of funding. But that’s where Kiva comes into play.

Kiva is a great website started by Mark Flannery and his wife in 2004 devoted to providing microloans to up and coming businesses. No, not tech businesses, but across a variety of industries. Taken from their website, the organization started when both Flannery and his wife, Jessica, were visiting East Africa conducting impact evaluation surveys for Village Enterprise Fund and Matt filmed interviews with small business entrepreneurs. It was there that they saw and heard firsthand how small grants of only $100 – $150 had been used to build small businesses which could then support a family. Essentially it’s all about what they term as “peer-to-peer” microlending.

Microcredit is the extension of very small loans (microloans) to those in poverty designed to spur entrepreneurship. These individuals lack collateral, steady employment and a verifiablecredit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit. Microcredit is a part of microfinance, which is the provision of a wider range of financial services to the very poor.

In the five years since Kiva was founded, a total of over $117 million loans have been made to small businesses thanks to over 600,000 lenders. While you might think that simply giving money to a business you don’t know much about will reap no rewards, then you should know that Kiva has an astonishing return rate of 98.27 percent! Headquartered in San Francisco, Kiva is the world’s first online micro-lending platform and is heavily supported by celebrities and used by schools and other organizations around the world to help others in need.

Here’s how you can use Kiva to help a small business:

First, through microfinancing institutions in various countries around the world, these businesses seek out the funds. While you are apparently donating to Kiva, your money is being distributed through these microfinancing institutions – essentially placing Kiva in the role of a middleman. Once the institutions receive requests for funding, they’ll submit a profile to the Kiva system. If you’re interested in being a lender and supporting a business somewhere in the world, simply start loaning money through PayPal or a credit card. Money is then distributed to the entrepreneur and over time they will repay back the loan. The cycle then continues.

It should be noted that Kiva will currently only give an interest rate of 0% to lenders and the minimum amount that lenders can give is $25.

That’s it. The process of giving is simple and the reward is that you’ll help fund some really great companies. You can check out Kiva by clicking here.

This entry was posted on Friday, January 29th, 2010 at 10:00 am and is filed under Uncategorized, UnintentionalEntrepreneur. You can follow any responses to this entry through the RSS 2.0 feed.


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