I Admire

Written by Anurag Jain | Updated: Jan 27 2008, 04:04am hrs
KIVA.ORG has one of the most brilliant business models I have seen. The whole concept of a person-to-person micro-lending website has truly changed the world by bringing the power of p2p to the micro credit market. Microfinance provides very small loans to start-up businesses, usually in the developing world.

Kiva.org works as an intersection between peer-to-peer financing and philanthropy. It uses the power of social networking to help entrepreneurs in the developing world start their small businesses with the help of loans from the site. It has totally globalised the concept of extending personal loans to one another. www.kiva.org, a California-based website, connects lenders and borrowers, anyone who can scan business proposals, photos and background information on potential borrowers and decide to invest can be a venture capitalist.

With no processing fee for the payment made, Kiva.org grants loans to the donor with very low or no interest. The whole process works in a very simple way. The payment is done through Pay Pal. The lender receives updates that are like blogs over e-mail and on the internet, and eventually gets paid back according to the performance of the entrepreneur. Sourcing fee-free money over the Internet gives entrepreneurs more capital to run their business while avoiding the high interest payments common to the developing world.

Kiva CEO, Matt Flannery has been once quoted as saying, Reducing the psychological barrier between lender and recipient has a lot of power in it.

Kiva.org isnt designed as an investment vehicle. But yes if you get the insight to the process it is certainly a new way to invest and with the current repayment rate (all partners) reaching 99.85%, it has almost become a safe way to invest. Although the concept of microfinance is not new, but giving freedom to choose and invest as low as $25 and letting individual, small-time lenders pick and choose which projects to fund this website has generated a lot of turbulence in the financial sectors.

Partially, this concept has been put to use by non-profit organisations which collect the money, raise cash and decide who is the needy and not greedy. But now the freedom is in your hands. Kiva.org, incorporated in November 2005, has been empowering the working poor for two decades, bringing affordable credit, savings, insurance and other forms of financial leverage to millions whom traditional banks wouldnt have touched.

Headquartered in San Francisco, Kiva.org uses technology to connect small-stakes lenders around the world with impoverished entrepreneurs in developing countries. Its a feat thats helping to change the nature of micro financing and global giving itself.

Kiva.org has been able to successfully tap into the niche area of small entrepreneurs and in a distributed network of small donors and lenders worldwide. It works as a cost-effective way of making sure money collected via the internet is distributed efficiently, and properly.

The author is the CEO of Perot Systems, India & President Perot Systems' Consulting and Applications Solutions Group and Insurance and Business Process Solutions Group Perot Systems