Around the world, there are countless people for whom a small loan of $50 to $1,000 can make a life-changing difference. In many cases, these loans allow them to grow their business exponentially or to complete their education. The problem in many developing countries is that poor people lack access to capital which would help them to improve their situation because it is not profitable for traditional banks to lend such small amounts. By the time the banks factor in the cost of screening, the cost of underwriting and paperwork, and the cost of sending collectors into villages and farms, they would simply lose money. This is where microfinance organizations like Kiva come in.

I first learned about Kiva just a few days ago and have been researching it with some intensity since then to make sure I understand the nuances of how it works. Essentially, you get to choose an individual from the website to loan to after reading their story and their goal. This allows you to support those efforts which are in line with your own priorities, whether they be business efforts, education, building projects, or something else. You get a little background profile on the borrower as well, such as whether they are married, how may kids they have, and what their past work experience is. All of this serves to make the process feel very personal and meaningful. You can even keep tabs on that status of their goals via updates as they work to repay the loan.

Also, as most loans are several hundred dollars or more, you can pool your resources with other lenders in order to fund the full amount. You have the option to join teams with similar goals and priorities as yourself, which can allow you to have more of an impact than you could on your own. For example, I joined the Kiva Christians team in order to band together with other others who share my faith. Regularly, people will post profiles of lending opportunities that the team may be interested in combining resources on, which adds a component of social and community involvement to the mix.

Kiva teams up with a large number of Field Partners, lenders who do the groundwork of screening requests, dispersing loans, keeping track of loans, and collecting payments. According to Kiva, about 80% of these Field Partners are non-profit organizations, and the 20% that are for-profit have a strong social mission. These Field Partners charge an interest rate to cover the cost of processing the loan.*

After doing my research, I talked with my wife and she was on board with making our first loan. She wanted to start out small since we were new to the whole thing, so we decided on $50. After looking around the site for awhile, we found the profile for Lawrence from Kenya. Lawrence is a father of two and is a small-scale farmer who was looking to buy a high-quality dairy cow. According to his profile, he has been farming for six years. The demand for milk is high in his village, which should allow him to easily repay his loan and make some profit as well. In addition to the dairy produced by the cow, Lawrence will benefit from the cow’s manure on his farm. Awesome!

The Field Partner providing this loan is also giving Lawrence training in saving money and in business. This helps to equip him with lifelong financial skills and to ensure he will get the maximum benefit from the money. All in all, Lawrence was looking to raise $350. With our contribution and eight others chipping in, we were able to fund his loan and get him the money he needed for his dairy cow. Now, we get to watch for the next year as Lawrence grows his farming business. When you are repaid over time, you can elect to have this money either returned to you or lent back out again. By electing to re-lend the money, you can multiply the effect by loaning the same money to a number of people.

Lawrence from Kenya

You can access your portfolio of loans in your dashboard at any time. This dashboard is really fun because you can see how much you’ve lent over time, all the people you have helped, the countries you have lent in, the teams you’ve contributed with, and more, all with slick graphs and charts. The geek in me really appreciate all of this.


I’ll be sure to keep you posted as I learn more about the site and as I use it more. Head on over to to check it out and see what you think. Please leave a comment or question; I’d love to hear your thoughts!

My Kiva Dashboard and Portfolio
My Kiva Dashboard and Portfolio (updated 5/8/2015)

*One of the concerns some people have with Kiva is the high interest rates charged by the Field Partners in these loans. However, it is important to keep everything in perspective economically. While the average interest rate is a surprising 34%, you must remember that the inflation rate in developing countries is often enormous in comparison to those we’re used to here in the West today. Even here in the states just 30 years ago, it was not uncommon to see mortgages and car loans at interest rates of 18%+ because of inflation. Next, you should keep in mind that the small amounts of these loans makes it more expensive to process in proportion to the principle amount. When you add to all of this the fact that the Field Partners have to pay collectors to travel many miles just to collect small payments, you’ll see that most of the Field Partners are barely covering their costs. In fact, most of them have a negative profit rate.