Kiva: Loaning Money to Promote Business in the Third World

A lot of businesses in third world countries never make it off the ground because there is simply no capital for them to make use of to get started. It's extremely difficult to open a business if you have no money to get started and you cannot borrow and money in order to get started, but a new non-profit organization might have an answer. A company called Kiva is allowing individuals to loan money to small-business owners in the third world to help them get started.

Kiva is hoping to fight global poverty by promoting economic expansion in third world countries, but they way they are doing this is rather unique. Kiva allows well off people to give small no interest loans to small businesses throughout the world. Essentially, "microfinance" companies can post the profiles of qualifying small business owners in well off countries, and anyone with a credit card can choose to help that small business owner out. Kiva takes all of the loan capital they get, and transfer it to small banks in their selected areas, and then disburse and administer the capital to the small business owners. As the entrepreneur pays back the loan, the person who gave the loan out can take their money out, or loan it out to another small business person.

PayPal doesn't collect any fees on Kiva transactions, Kiva distributes all of the money to the entrepreneur. The lenders will not receive any sort of interest or other profit, so it is pretty much a charity. The field partner company collects the money from the entrepreneur and collects interest from the entrepreneur which pays to keep the company running. Borrowers are charged 16% interest to pay for the fees associated with running the organization.

Loaning money to a small business person across the world on Kiva is ridiculously easy. All you have to do is browse around Kiva, find an entrepreneur that you'd like to lend to, click a button, send money through PayPal, and Kiva takes it from there. If you've ever wanted to promote economic expansion in developing nations, this is the way to do it.