When you need a loan, where do you go? Some of us are lucky enough to ask friends and family for a loan, but what if you don’t know anyone who’s willing to give you the funds to go back to school, or finance a business idea you’re passionate about?
Off to the bank you trod, keeping your fingers crossed that you’ve got enough credit to get the loan you need.
What if there was a better way? A way for you to get a loan for nearly any amount with nearly any kind of payback period? What if that loan had little to no interest? What if it came from a real person who cares about you and your goals instead of a large company that’s just looking to make money on interest?
These are all questions that were asked by Kiva, and they’ve turned their answers into a revolutionary platform with 2.5 million borrowers and 1.6 million lenders.
And it all started with the father of microfinance, Muhammad Yunus, in Bangladesh.
From Bangladesh to America and beyond
Muhammad Yunus won the Nobel Peace Prize back in 2006 for creating Grameen Bank. His concept is what inspired Jessica Hansen and the rest of the team at Kiva.
“A lot of women in Bangladesh were begging for money in the streets,” Jessica shares. Turns out, they were begging because the banks wouldn’t lend them money because they’re women, they’re poor, and they’re illiterate.
“He started lending them little bits of money out of his own pocket and they paid him back in full, amazingly, even though they’re in poverty, and it grew into this movement of microfinance. So, the idea was, ‘That’s great, it’s working in Bangladesh, but why don’t we make this possible for anybody anywhere?’”
Today, Kiva is based in San Francisco and serves 83 countries around the world.
A brand with emotional qualities unlike any other
Many businesses are remarkable in their own way, and they have a greater purpose. There’s no denying that these are brand pillars that Kiva does quite well, but few businesses are able to have as big of an emotional impact as Kiva. And that’s partially due to the fact that Kiva doesn’t just help people—it helps people help themselves.
Jessica Hansen joined the sector of international development in the late ’90s and kept noticing the same thing.
“We were trying a lot of the same things again and again and expecting different results. We would fundraise, and we would get all this food together, and we would ship it somewhere. There were no sustainable solutions. They were just handouts that weren’t allowing them to take ownership over pulling themselves out of poverty.”
Instead of simply giving a woman a fish in Bangladesh, or Kenya, or even a low-income neighborhood in New York when she’s hungry, Kiva teaches her how to fish, empowering her to be the agent of her own change.
Jessica says that emotional pull is something that both lenders and borrowers really tap into. “People really want to help other people get out of poverty and make a better world. It’s pretty inspiring.”
A great idea that really works
Lending money can be a tricky business. There’s always the possibility that you won’t get paid back. One would think that the possibility of non-repayment is even more pronounced in the world of microfinance.
Surprisingly, the opposite is actually true.
“We get paid back over 97 percent of the time, which is a higher payment rate than any of the bank’s experience. People who live in conflict zones, live in extreme poverty, are in places affected by huge natural disasters, still pay back more than everyday middle-class people in the states generally do.”
That’s partially thanks to the fact that it’s real people lending to real people. It’s a lot easier to skip out on a payment to the bank, but not repaying an actual person who went out on a limb to help you is a different story altogether.
The concept also works because Kiva is extremely mindful of who they partner with. “In the beginning, we ended up having a lot of people going, ‘Oh, well, I guess I defaulted,’ and we had to grow our process of reviewing people.”
Today, Kiva doesn’t have any problems in that department.
Kiva started with just $3,500 in loans. Now, 11 years later, “We, on average, do about a million dollars in loans every 3 days. For International Women’s Day, we did 6 million dollars in loans to women.”
A future celebrating innovative people and ideas
With such an emotional quality to their brand, it makes sense that Kiva is growing and expanding quickly.
“The average loan is 400-something dollars on Kiva. We’re [planning to] support more small growth businesses and small to medium enterprises. One of our largest loans happened in Haiti. It was a $100,000 loan, which is not so micro in the world of microfinance.”
Kiva also gets the opportunity to support innovative ideas through their loan partnerships. From biodigesters that eliminate bacteria that cause public health issues in third world countries to partners that payback in carbon credits, Kiva is changing the world with the help of real people by enabling them to make a difference one dollar at a time.