Kiva Now Allows You to Lend to US Small Businesses

I have mixed feelings about this:

#1, I hope Kiva dots all the is and crosses all the ts more than Prosper did, or they might also feel the wrath of financial regulators.

#2, While I love the idea of loaning to entrepreneurs to improve their standings (and did it on Prosper), it is hella-risky and I don't see that 2% delinquency rate being maintained. One thing I learned through hard experience with Prosper: there is a reason banks are banks.

#3, That 2% delinquency rate is, how do I put this gently, creative accounting. Kiva's lending partners routinely do things like rolling over loans to avoid having to tarnish their near-perfect records -- the original $100 loan isn't four years past due, it is a $500 loan now which is paying as agreed (to the new, updated terms). They also use collection tactics that in the US would be illegal (you know all those social pressure things, you'd better repay the loan for your chicken or we'll tell your cousin you cost him the loan for his cow? That has been done here before. Legislatures were not neutral about the practice, which is why we have laws like the Fair Debt Collection Practices Act, which prohibits 3rd party disclosure of the fact of indebtedness, to say nothing of asking someone's cousin to be your enforcer. The FDCPA might not apply directly to Kiva's partners, but similar laws exist in all 50 states.)

The triple digit interest rates that some international Kiva parters charge, to compensate for the we-can't-call-it-default-risk, also probably won't fly that well here. Bad news: it isn't automatically profitable to give loans to poor people at normal US credit card interest rates. As mentioned previously, there is a reason banks are banks. Look at Prosper defaults on business loans -- off the top of my head, in the lower credit grades they exceeded forty percent.

It's only slightly misleading to say Kiva lets you lend to small businesses, but downright false for RWW to say it lets you invest in them. If you can't get any return on the loan, it's simply not an investment.

I wonder how well the "think of it as a donation" model will work when it is Americans lending to Americans? I don't have any poor expectations or anything, it just feels a little different somehow because of our cultural baggage. I'm curious to see how it goes over.

It will be interesting to see if the delinquency/default rate of domestic loans is less than or greater than international micro-loans which are reported to be at only about 2%

they should partner with YCom or setup a secondary market for folks that didn fit the niche focus of Ycom, so young startups can get cash from a broad community. maybe its a whole separate biz concept loosely modeled after YC and Kiva.

I've been lending to Kiva for the past two years, and for me, it's been a fulfilling experience. I think I definitely feel a connection to the people I'm lending to through reading their stories and knowing what my loan is going towards. Now that it's open to US small businesses, I thought I would be on the bandwagon since there's a lot of need just on our front doorsteps. However, the current opportunities listed on Kiva in the US are a little uninspiring. I'm not sure whether it's purely psychological in the sense that these people are closer to home (have the perception of already being more fortunate), but I don't feel as though I'm helping someone overcome poverty by paying for advertising for their business. Maybe it's just a different kind of poverty manifested here at home.

One of Kiva's featured United States entrepreneurs is working down the street from where I live. I dropped by and bought a sandwich because I was curious.

On one hand, it's interesting to personally meet the beneficiary of microfinancing. On the other hand, it's interesting to think there are some days that she makes more than me.

Here's the kiva link to her profile: http://www.kiva.org/app.php?page=businesses&action=about...

Kiva ranks up there with Better Place as most inspiring types of companies to create post-success.

World changing ideas.

That's frickin sweet, I've been waiting for this. Boom!

it would be fun to autogenerate a thousand or so fake profiles and see if you could earn six figures on this