Thank you for your patience as I have been up to my eyeballs in kitchen remodel and then traveling for Easter weekend. My part of the kitchen remodel (painting the cabinetry) is done, and it’s in the hands of the pros who will soon be installing the countertops and the new sink and faucet. I can’t wait to have it all done!
Over the years I’ve mentioned the power of microfinance in creating long-term change for people living in poverty. The lack of access to relatively small amounts of capital stunts an individual’s ability to build for the future. But I don’t just talk about microfinance; I actually participate in the process.
I currently have a portfolio of four microfinance loans through Kiva. Kiva is a four star-rated non-profit organization that connects private lenders to small borrowers around the world. With an investment of $25 or more, you can become part of a team that helps poor or underrepresented people get the capital they need to start or expand their businesses. The loans vary in amount, as do the borrowers’ projects, but the lenders always chip in at $25 per person. Kiva gives you the tools to choose your borrowers by gender, location, group or individual, and by investment type (education, agriculture, production, etc.). You can narrow down the results and then read through the borrowers’ stories until you find one with which you connect. Some loan projects even have matching funds available, so your $25 can go twice as far!
The borrowers have a repayment schedule, just like a loan from your local bank or credit union, and they pay a little interest. Kiva claims their repayment rate is 97.1%, and the individual stories come with a risk rating to help you chose your project. So far all of my loans (with the exception of the one I made just this week) have started to make repayments.
I make a new loan twice a year, at Christmas and at my birthday. My goal is to build a portfolio of loans large enough that I can continue making my bi-annual loans using only the repayment capital from the old loans. It’s really exciting to read the stories of the potential borrowers and to have the opportunity to support their dreams and a better future for their families. I currently have four loans open, and they include male, female, and group borrowers on several continents. Two of my loans helped small farmers add bee keeping to their family farms – a benefit for the environment as well as the farmers’ futures. One of my loans is right here in the US, helping a small business owner invest in her company. The fourth loan helped a group purchase raw materials for their peanut butter business (my son chose that one!).
I always evaluate a potential project by the long-term sustainability it will provide for the borrower. For example, I would pick a project that helped a farmer get equipment before I would pick a project that provided wholesale goods that would be here and gone. Not that wholesale goods is a bad investment, but I want my investment to keep on giving year after year, making it possible for the borrowers to do more for many years to come. Some of the donors like giving to loans for women in countries where women are denied access. Some donors have a heart for a particular country and make loans in those places.
Participating in a microfinance loan is a low-risk investment. If a loan goes unpaid, you just made a $25 donation – no big loss. But if it gets repaid and you continue to reinvest the money, your $25 could have a tremendous impact for generations to come.