is organisation set up to facilitate micro financing of in the developing world as in general it is too expensive for banks to lend such small amounts. Anyone, using a credit card can choose a businessperson listed on their site to lend money to. Then updates are given regularly as to how they are getting on and loans are usually refunded in 6-12 months.

Of course, that leads to many questions, such as ‘what is the risk, and will I get my money back?’ And ‘how can I be sure a middleman won’t take advantage?’ Fortunately there is a detailed FAQ, and these questions are answered:

Basically, you don’t get interest and from this year Kiva will charge a 2% fee to the field partners and the field partners charge interest to the business person (something more that 2%, but we are assured it won’t be exorbitant). And they do at least list out the field partners. Also the feedback is through the field partners, rather than the entrepreneurs.

One question that is not answered relates to exchange rates. Some of the countries will have a fixed exchange rate to USD, but that isn’t the case for all the places money can be lent to. Inflation could impact the chance of repayment, no matter how successful the enterprise has been.

They say 100% of all monies lent has been returned to date, and suggest that instead of giving all the money you are lending to on entrepreneur, you could spread it out to many (in different countries) to diversify the risk.

I think it is a fascinating idea, and with the field partners they have the network in place to make it work. I think I will look into this further.

Found via: Sally’s journey