Beginning today, US entrepreneurs will now be able to seek loans on kiva.org. Originally a site to lend to micro-entreprenuers in Africa, Kiva has now established itself as a truly global destination to facilitate lending to help alleviate poverty.The move to the United States comes at an opportune time. With the credit crunch, this is a tough time for aspiring small business owners to get the initial loans to get off the ground. Even formerly creditworthy individuals may find it hard to receive a small business loan. Some small business owners have already turned to p2p lending, and now Kiva also offers an alternative funding stream.
The timing of the launch is interesting for another reason: An article in yesterday's New York Times reports that charitable giving fell last year by the largest percentage in five decades. Kiva is still an interest-free investment. Might domestic micro-lending revitalize poverty alleviation efforts in the US? Will more donors feel inspired to provide p2p loans rather than donate to charity (as we've discussed before)?
Part of the answer surely depends on whether the remarkable loan repayment rates hold steady in the domestic US market (99.7%). One of Kiva's partners for this effort is ACCION USA, also the partner for Microplace. When I initially opened my Microplace accounts, I steered clear of the US borrowers facilitated by ACCION USA because they offered the lowest average repayment rate (more like 94%-96%). Just now when I researched to confirm those numbers, I see that Microplace has eliminated that statistic entirely across all of its loans. Why? Regardless, it will be interesting to see how the repayment rates of domestic loans compare to rates of the international loans.