Tomorrow Kiva will announce that it will start to fund loans to borrowers in the United States. Kiva, which so far lets anyone support loans to small entrepreneurs in developing countries, is reacting to lender suggestions who wanted to use Kiva to help borrowers in need in the US.
In the US Kiva will partner with Accion USA and Opportunity Fund to select eligible borrowers. Initially the small business owners borrowing will be from the areas of Atlanta, Boston, Miami, New York and San Francisco. Continue reading →
Peer to peer lending is innovative and new. New users usually have lots of questions when grasping the marketplace mechanisms. Beyond the FAQ of the p2p lending service, a great place to learn is usually a forum, where users (mostly lenders) exchange experiences and post and answer questions.
There are “official” forums provided by the lending services and independent ones. One of the first ones, the official Prosper forum, became one of the most notorious ones. After Prosper “moderated” negative and critical posts it later deleted the initial forum in total. When a copied version of the forum’s archive was made available on seperate internet site Prosper tried toÂ shut the site down, but failed.
But this is an extreme example. I found that on nearly all other forums a very helpful and supportive attitude rules.
In today’s conference call, Kiva explained plans to reduce currency risks for the local MFIs by having lenders absorb losses, if currency depreciation is higher then a threshold x% (with x% yet to be defined).
Currently currency risk for loans issued in local currency is fully taken by local MFIs of Kiva. In future MFIs can select for new loans, if they want to keep it that way, or if a new stop-loss rule shall apply.
Slide 14 shows how many of the loans would be affected, if the stop loss rule would have applied in 2008/ in the last 5 years.
One question in the Q&A of the conference call was, why currency risk came up just now after years of operation of Kiva and the answer was that the problem is now more pressing with the recent appreciation of the US dollar.
Another question was, if a possible solution would be that Kiva just would supply the hard currency as collateral to a local bank in the country which would then issue the loan in local currency. The answer was that this would be impractical, because in case the local currency appreciates then the bank would demand a raise in the collateral, which could not be handled as neither Kiva has the funds nor could the lenders on the loans affected be expected to make an additional payment for this.
It will be interesting to see, if some MFIs stick to the current mode and upload loans with no currency risk sharing to the platform.
On MYC4 lenders take currency risk in full but earn interest.
Kiva has just added the first video to one of the borrower’s profiles. A video conveys much more information about the business of the borrower. And by posting the videos on Youtube, Kiva achives viral marketing effects.
I do wonder why they did post such a short video (5 seconds) as example – bandwidth considerations?