Young Matt and Jessica Flannery and Premal Shah from San Francisco started this microfinance distribution company, thinking they could use the Internet, as eBay does, to connect people who are impoverished and need funds to get their small businesses going or expanded. The idea is that a 0% / no collateral loan allows more dignity for the recipient and the lender than donations.
Kiva works with microloan partners that help screen qualified borrowers, which number around 15,000 now. Currently the loan repayment rate is 99%. Collections usually happen monthly when the partner visits the entrepeneur. When the lender's (yours) loan is repaid, you can decide to receive it or reinvest it with another entrepeneur. The partners keep journals, which help keep you informed about the entrepeneur's progress.
For example, Malika is a single mother in Tajikistan. She is raising a daughter. Malica, 46, has high school education. Malica sells women’s shoes. Her daughter sells in a small store at the central market, while Malica travels to sell on the markets nearby. Two years ago, when Malica received her first loan to expand her business, she did not own the store. Gradually growing the business, Malica opened the small store. Today, Malica continues to collaborate with MicroInvest. She asks for another loan to continue expansion of her business.
You can donate as little as $25, which goes to an entrepeneur of your choice. Look here to see more of how it works.
If you browse their site, you'll see that they address issues of loan defaults, embezzlement and other risks. Just like any project that involves humans, it isn't 100% perfect. I couldn't find information about how much commission Kiva gets.
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