I mentioned this term in my previous post about crowdfunding. Microfinancing is the practice of providing financial services to low-income individuals or to those who do not have access to typical banking services. The idea behind it is to give low-income individuals the opportunity to lift themselves out of poverty. Microfinancing differs from crowdfunding because it is a interest free loan that you are providing that will most likely be paid back. I am not telling you about microfinancing because I think it is a great investment. I think it a great opportunity to help less fortunate individuals through out the world improve their current lifestyles.
If you have some extra cash and are looking to help out someone, check out Kiva. Kiva is a non-profit organization that has created an online platform to connect low-income individuals with individuals from around the world that are willing to provide financing. Various loan opportunities and their purpose can viewed through their website. There are currently 2,542 loans available to browse. You can loan as little as $25 many diverse sectors, which range from agriculture to retail operations. Kiva has helped facilitate more then 386,000 loans totaling over $296 million. The current repayment rate on the loans is 98.94% and they have helped people in 61 countries.
You may be wondering what happens to your money after you give it to Kiva and how do you know these individuals are legit. Kiva has partnered with microfinancing institutions all over the world, which they call field partners. These field partners are responsible for screening the loan applicants, posting the loan requests, disbursing the loans and collecting repayment.
Here is a story of how Kiva works and how a loan helped a farmer in Bolivia transform his business:
OK, I will now jump off my crowdfunding and microfinancing soap box. The purpose of these posts was to show you different and exciting ways to help others if you have the means. There is a certain satisfaction and joy knowing that you helped an entrepreneur fulfill their dreams or an individual provide food and shelter for their family.
Let me know what you think about crowdfunding and microfinancing.