[N8 v2.0]

www.kiva.org

http://www.pbs.org/frontlineworld/stories/uganda601/

Kiva – the world’s first peer-to-peer, distributed microloan website. The site allows you to lend a small amount of money, say $25, to needy microenterprises in developing countries (for now just Uganda). You receive repayment at the end of the loan period (normally 6-12 months) without interest. If they default on the loan, your loan becomes a donation – though none of the businesses have defaulted yet.

 

[sanjuro]

it is genius

 

[Honus]

I've got a better idea on a much grander scale- why don't we loan developing countries billions of dollars based on inflated economic growth percentages so that they can never afford to pay back the loans, thereby forcing them into financial subjugation by the U.S.? But here's the kicker- they never get the money! It goes to U.S. corporations that are contracted to provide the services that will supposedly allow for this growth that will never take place.

Oh wait, that's been done before....

 

[MMike]

meh...just nuke 'em. They're probably just Al Qaeda anyway

 

[N8 v2.0]

I've got a better idea on a much grander scale- why don't we loan developing countries billions of dollars based on inflated economic growth percentages so that they can never afford to pay back the loans, thereby forcing them into financial subjugation by the U.S.? But here's the kicker- they never get the money! It goes to U.S. corporations that are contracted to provide the services that will supposedly allow for this growth that will never take place.

Oh wait, that's been done before....

*yawn*

just underlines the pointlessness of throwing money at a problem...

with Kiva, your $'s go directly to a specific small business person you choose to make a loan to.

So far there have been no defaults on over $4Million loaned.

 

[$tinkle]

I've got a better idea on a much grander scale- why don't we loan developing countries billions of dollars based on inflated economic growth percentages so that they can never afford to pay back the loans, thereby forcing them into financial subjugation by the U.S.? But here's the kicker- they never get the money! It goes to U.S. corporations that are contracted to provide the services that will supposedly allow for this growth that will never take place.

Oh wait, that's been done before....

there are more books out there than just CoEHM, y'know...

but, if you're into self-flagellation, who am i to not watch?

 

[Honus]

there are more books out there than just CoEHM, y'know...

but, if you're into self-flagellation, who am i to not watch?

Oh, I'm very aware of that. Most of it reads like fiction....

Considering the individual that started this post I just couldn't resist..... I think the sarcasm went over his head anyway.

 

[Transcend]

*yawn*

just underlines the pointlessness of throwing money at a problem...

with Kiva, your $'s go directly to a specific small business person you choose to make a loan to.

So far there have been no defaults on over $4Million loaned.

The Grameen bank has been doing this for years, without the internet/ It is credited with giving hundreds of thousands of people a huge boost in their standard of living.

 

[ohio]

The Grameen bank has been doing this for years, without the internet/ It is credited with giving hundreds of thousands of people a huge boost in their standard of living.

But they do it for profit, which doesn't help rich westerners assuage their guilt for buying iPod accessories.

 

[Transcend]

But they do it for profit, which doesn't help rich westerners assuage their guilt for buying iPod accessories.

True, although the interest is fairly low, and is capped, unlike regular banks. They also require no collateral and have no time strict frame with penalties for loan repayment.

 

[skatetokil]

Grameen bank interest is fairly low compared to loan sharks, but not compared with what you or I pay for money. They are typically between .5-1% a week - in other words, 26-52% APR. There is a lot of room to lower the cost of money in these place especially now that the internet and cell phones are penetrating deep into these countries. I work for a startup land titling and microfinance company, and we're shooting for a cost to consumers of 16% apr. . . and believe me thats going to be hard to hit.

Also, Grameen has a very strict timeframe for repayment. You pay every week. Not as warm and fuzzy as people would like to believe here in the states, but people need financial services.

 

[Transcend]

Grameen bank interest is fairly low compared to loan sharks, but not compared with what you or I pay for money. They are typically between .5-1% a week - in other words, 26-52% APR. There is a lot of room to lower the cost of money in these place especially now that the internet and cell phones are penetrating deep into these countries. I work for a startup land titling and microfinance company, and we're shooting for a cost to consumers of 16% apr. . . and believe me thats going to be hard to hit.

Also, Grameen has a very strict timeframe for repayment. You pay every week. Not as warm and fuzzy as people would like to believe here in the states, but people need financial services.

Yes you pay weekly, however they don't have a strict time frame for repayment.

Here's a quote from their site in fact:

Conventional banks go into 'punishment' mode when a borrower is taking more time in repaying the loan than it was agreed upon. They call these borrowers "defaulters". Grameen methodology allows such borrowers to reschedule their loans without making them feel that they have done anything wrong (indeed, they have not done anything wrong.)

There is no penalty for doing this. Also, the interest is not compounded, so the figures you provided are not able to be compared to a regular bank.

Interest on conventional bank loans are generally compounded quarterly, while all interests are simple interests in Grameen Bank.

 

[Transcend]

Grameen bank interest is fairly low compared to loan sharks, but not compared with what you or I pay for money. They are typically between .5-1% a week - in other words, 26-52% APR. There is a lot of room to lower the cost of money in these place especially now that the internet and cell phones are penetrating deep into these countries. I work for a startup land titling and microfinance company, and we're shooting for a cost to consumers of 16% apr. . . and believe me thats going to be hard to hit.

Also, Grameen has a very strict timeframe for repayment. You pay every week. Not as warm and fuzzy as people would like to believe here in the states, but people need financial services.

Yes you pay weekly, however they don't have a strict time frame for repayment.

Here's a quote from their site in fact:

Conventional banks go into 'punishment' mode when a borrower is taking more time in repaying the loan than it was agreed upon. They call these borrowers "defaulters". Grameen methodology allows such borrowers to reschedule their loans without making them feel that they have done anything wrong (indeed, they have not done anything wrong.)

There is no penalty for doing this. Also, the interest is not compounded, so the figures you provided are not able to be compared to a regular bank.

Interest on conventional bank loans are generally compounded quarterly, while all interests are simple interests in Grameen Bank.

It's also important to remember that we are talking about amounts in the tens and twenties of dollars generally, not the hundreds of thousands.

 

[skatetokil]

If you borrow $100 for a year at 50% interest, you end up paying the grameen bank $150. that is a bad interest rate no matter how you compound it. not saying grameen is evil, but you should be aware.

The reason there is no "default mode" is that Grameen loans depend on peer groups and cross-certification of loans. It's like you and 10 buddies all cosign each others car loans. You miss a payment, and your peer group figures out how to deal with it. You aren't penalized, but somebody pays up.

 

[N8 v2.0]

The Grameen bank has been doing this for years, without the internet/ It is credited with giving hundreds of thousands of people a huge boost in their standard of living.

You can pay Kiva thru PayPal too....

easy.... very easy to help a business person out in a country where the avg income is less than $1 a day.

I like the fact that the money is a LOAN and not a grant... people tend to invest loaned money better.

 

[skatetokil]

does kiva have a staff of kneecappers to ensure that i get paid back?

 

[MikeD]

I loaned a bunch of money to the Crown Prince of Nigeria through one of those sites. I'm waiting for the millions to begin rolling in any day now!

 

[Transcend]

I like the fact that the money is a LOAN and not a grant... people tend to invest loaned money better.

Ya, that is the entire idea behind the microloan system. People feel more empowered knowing they HAVE to make things work, as well as the fact that they know THEY are the only ones deciding what can be done with their own money.

 

[Transcend]

If you borrow $100 for a year at 50% interest, you end up paying the grameen bank $150. that is a bad interest rate no matter how you compound it. not saying grameen is evil, but you should be aware.

The reason there is no "default mode" is that Grameen loans depend on peer groups and cross-certification of loans. It's like you and 10 buddies all cosign each others car loans. You miss a payment, and your peer group figures out how to deal with it. You aren't penalized, but somebody pays up.

Of course it is higher interest than you and i could pay. These people have no money, no collateral and are an exceptionally high risk by the standards most modern banks would use. No establish financial institution at the time would even give them a second throught, so having ANY means to borrow money and better their lives is a huge thing.

Of course, they also have a near 0 default rate and aren't blowing their loan on a new fishing boat either.

 

[SkaredShtles]

<snip>
Of course, they also have a near 0 default rate and aren't blowing their loan on a new fishing boat either.

Then again... that might be *exactly* what they're spending their money on.

 

[ohio]

I don't want the bigger picture of how great all of these micro-finance ventures are to get lost in discussion of the details.

It's a VERY young industry, and the business models are still being sorted out through competition and trial/error, but on the whole this is a very promising method for spurring healthy, sustainable development in parts of the world that never before had a mechanism available to initiate and build wealth. Good stuff, and a great meeting point for conservative and liberal philosophies on foreign aid.

Let's all hug and sing Cumbaya.

 

[skatetokil]

Of course it is higher interest than you and i could pay. These people have no money, no collateral and are an exceptionally high risk by the standards most modern banks would use. No establish financial institution at the time would even give them a second throught, so having ANY means to borrow money and better their lives is a huge thing.

Of course, they also have a near 0 default rate and aren't blowing their loan on a new fishing boat either.

Like i said, I work for a microfinance company so you don't have to sell me. The Grameen bank is just one of many models, and my professional assessment is that their service could be provided more cheaply if they took advantage of the technological leaps that have taken place since the 70s when they started doing business. They may have been leaders in the financial services revolution, but they are hardly pushing the limits at this point. As big banks that 20 years ago scoffed at the idea of making a $50 begin to automate and streamline their processes, outfits that charge 50% interest rates and rely on group lending are going to get buried.

In fact, I hope to be in the process of burying them by designing a product that is better/cheaper/faster. We'll see what happens.

 

[N8 v2.0]

Ya, that is the entire idea behind the microloan system. People feel more empowered knowing they HAVE to make things work, as well as the fact that they know THEY are the only ones deciding what can be done with their own money.

welcome to the world of running your own business... except here in the US the government likes to decide for you what to do with your money.

 

[N8 v2.0]

Like i said, I work for a microfinance company so you don't have to sell me. The Grameen bank is just one of many models, and my professional assessment is that their service could be provided more cheaply if they took advantage of the technological leaps that have taken place since the 70s when they started doing business. They may have been leaders in the financial services revolution, but they are hardly pushing the limits at this point. As big banks that 20 years ago scoffed at the idea of making a $50 begin to automate and streamline their processes, outfits that charge 50% interest rates and rely on group lending are going to get buried.

In fact, I hope to be in the process of burying them by designing a product that is better/cheaper/faster. We'll see what happens.

there is a guy from PayPal who is now the president of Kiva... seems like a good fit really.

 

[ohio]

welcome to the world of running your own business... except here in the US the government likes to decide for you what to do with your money.

Right, because we have higher taxes than everyone else. Oh wait, no we don't.

The US has the most business and development friendly laws of any large nation on Earth, which is how we have been so economically successful and why businesses continue to operate here.

I'm the first to point out our system has faults, but telling you what to do with your money isn't one of them. How about: "If you don't like it, leave."

 

[Silver]

Right, because we have higher taxes than everyone else. Oh wait, no we don't.

The US has the most business and development friendly laws of any large nation on Earth, which is how we have been so economically successful and why businesses continue to operate here.

I'm the first to point out our system has faults, but telling you what to do with your money isn't one of them. How about: "If you don't like it, leave."

You're new here, right?

 

[N8 v2.0]

Right, because we have higher taxes than everyone else. Oh wait, no we don't.

The US has the most business and development friendly laws of any large nation on Earth, which is how we have been so economically successful and why businesses continue to operate here.

I'm the first to point out our system has faults, but telling you what to do with your money isn't one of them. How about: "If you don't like it, leave."

one thing about America is that a good lawyer and an even better CPA can minimize the gov's fingers in your pie.



But agreed, there is no easier place in the world to start a business than the good ol' USA....