Opportunity Fund Teams Up with Kiva to Allow YOU to Make Microloans
On June 10, 2009, Opportunity Fund and Kiva joined forces to bring online micro-lending to the Bay Area. Kiva, founded in 2005, is a person to person micro-lending website through which individuals with PayPal accounts can make small dollar loans to poor entrepreneurs. When Kiva began, the lending was restricted to individuals in developing countries. Opportunity Fund, California’s largest non-profit microlender, has become a local field partner of Kiva and thus can expand its current micro-lending functions to even more individuals. Opportunity Fund is a Bay Area based microfinance company that offers “financial education, microfinance loans, matched savings accounts, and affordable housing financing.” Now, through its partnership with Opportunity Fund, they have begun lending to Bay Area entrepreneurs through Bay Area residents. Through Kiva, individuals can go online and make loans to Bay Area entrepreneurs. Individuals can lend as little as $25 or as much as $1,000 to fellow Bay Area residents and while there is no financial return (other than the principal lent out); the social return can be enormous.
For example, Carl, who lives in the Bay Area, has washed windows for over 20 years to supplement his primary income and make ends meet. During this time, he often had to wake up at 3:00AM in order to work the jobs that allowed him to support his family. His wife has also served as his bookkeeper since day one, so his is a family run business. About five years ago, he decided to go into window washing full time and in June he needed to hire an additional employee and do some advertising. With his $5,000 loan from Opportunity Fund and Kiva, Carl was able to expand and promote his business. Carl’s loan was fully funded on July 17, 2009 and he has already paid 6% of it back. All those who participated in lending to Carl have helped him to support his family and pursue his dream of working for himself.
Kiva has a low 1.65% default rate and is attempting to alleviate poverty through small business funding. Opportunity Fund’s businesses have a high survival rate of 85%. This means that the majority of loans made on Kiva are paid back and the majority of Opportunity Fund’s clients are successful small businesses. Kiva interest rates are reasonable, but higher than those offered with traditional loans because of the high transaction costs involved in this type of lending. Kiva’s field partners, such as Opportunity Fund, take the time to get to know the small businesses that are put on the website to be eligible for loans. Because of this, the recipients of the loan are more apt to pay the funds back because they have cultivated a relationship with Opportunity Fund (or another non-profit micro-lender). To learn more about the relationship between Kiva and Opportunity Fund, click here.