Recently Kiva launched a new pilot program called Kiva Zip, which is testing new approaches in direct P2P lending, rather than the traditional approach via MFIs.  There are already companies out there like Zidisha who are already doing this, so it’ll be interesting to see what Kiva comes up with.  Here’s more about the program:

What is Kiva Zip?
Kiva Zip is an innovation of Kiva that will test new approaches in direct person-to-person microlending.

What is Kiva hoping to accomplish with Kiva Zip?
Kiva Zip (Zip.Kiva.org) shares the same mission as Kiva.org – to connect people through lending to alleviate poverty.
Kiva Zip is testing new ways of realizing this mission with the goal of expanding our reach to unserved populations by using new technologies that also drive down costs to the borrower.

How is Kiva Zip different from Kiva.org?
Since its launch in 2005, Kiva’s mission has been to alleviate poverty by connecting people through microlending. By working with a global network of microfinance institutions (MFIs), Kiva.org has enabled people like you to make over $250 million in loans to nearly 700,000 borrowers around the world, with a nearly 99% repayment rate, as of December 2011.
Kiva Zip is testing new ways of realizing this mission with the goal of expanding our reach to unserved populations by using new technologies that also drive down costs to the borrower. Here’s a little more detail about each of these differences:

Unserved populations
The Kiva Zip pilot is intent on expanding financial access to borrowers who cannot otherwise be served by a bank or microfinance institution. This means Kiva Zip borrowers may have a different profile from Kiva.org. For example, in the U.S. it is becoming apparent that a lot of start-up businesses currently lack access to capital, and that these are prime candidates for Kiva Zip loans; whereas most of the U.S. businesses on Kiva.org are already established.

Use of new technologies
Through the use of technology, Kiva.org was the first-ever microlending website to allow any individual, with a computer and a credit card, to lend money to a low-income entrepreneur halfway around the world.
Kiva Zip is attempting to take the use of technology to the next level, such as mobile and electronic payments that enable the direct transfer of funds between lenders and borrowers. In the Kiva.org model, these payments are managed through Kiva’s microfinance partners. Kiva Zip still partners with organizations and individuals that work closely with borrowers (these are called “trustees” in the Kiva Zip model), but in Kiva Zip trustees never handle the loan funds.

Low cost loans
Low cost loans to borrowers is one of the main benefit of Kiva Zip being able to use new technologies to enable the direct transfer of funds. For the Kiva Zip pilot phase, Borrowers will be paying 0% interest rates. This differs from the Kiva.org model where borrowers do pay interest to the microfinance institutions in exchange for their administration of the loans, and a number of other important services that the MFI provides to borrowers (technical assistance, financial advice and training, etc.).

Increased risk to lenders
Another important difference is that Kiva Zip loans are expected to be even riskier than loans in the main Kiva model. Kiva.org has been operating for over 6 years now, and many of the kinks have been worked out over time. Because the Kiva Zip model is new, it is likely that there will be many learnings and changes as the pilot is launched over the next few months. For this reason, the repayment rate on Kiva Zip is expected to be significantly lower than the nearly 99% seen on Kiva.org today (as of December 2011). As due diligence methodologies are tested and fine-tuned, we are confident that repayment rates will continue to improve.

We are excited to begin this first Kiva Zip pilot, and we know that there will be a number of other smaller trials and experiments on the Kiva Zip website. For example, there are plans for borrowers on Kiva Zip to be able to make comments and updates directly on their own loans; different loan sizes might be explored, or displaying loan amounts in Kenyan Shillings; and the look and feel of borrower profiles will differ from those on Kiva.org. It is our hope that many of these experiments will prove successful, and we will be able to apply our learnings to Kiva.org to continue to deliver the best experience and outcome for all lenders and borrowers.

WOW

Kiva recently announced that they are offering $25 free trials to new users so that they can experience they joys of microfunding. Visit their website to learn how it works

In addition to free trials, Kiva is offering free merchandise to current lenders who sign up 5 or 20 people to use Kiva:

Kiva City, which launched a couple weeks ago is a new way for Kiva to accelerate the growth of U.S. microfinance by empowering communities. Detroit was selected as the first Kiva City, a partnership between Kiva, Michigan Corps, Knight Foundation and ACCION USA to expand the reach of Kiva lenders to the entrepreneurs in Detroit.

If you missed it, you can view Bill Clinton announcing Kiva City here.

The day after President Clinton announced Kiva City, the Kiva Detroit team held a community celebration in Detroit to launch the initiative. The Microlending Film Project filmed the event, and have shared their footage for those who were unable to attend:

Here’s a little more info about Delphia, one of the first borrowers:
Delphia is launching a street newspaper, Thrive Detroit, to enable dozens of homeless and at-risk Detroiters to become entrepreneurs. Delphia works at a homeless shelter running a program designed to house both the homeless and those at risk of becoming homeless. One day, her boss came back from a trip to Philadelphia and mentioned a “street newspaper” he had seen there. These newspapers were made for and sold by the homeless and at risk people of Philadelphia. This gave Delphia an idea: could a street newspaper work in Detroit? It would require $1,275 to finance her first newspaper printing. When she heard about Kiva Detroit, she started working with the Michigan Corps team to apply for a loan. Her loan was approved by ACCION USA and posted to Kiva. Now, Thrive Detroit is ready to hit the printing press!

Read the full bio here.

A couple days ago Bill Clinton announced the launch of “Kiva City’ at the Clinton Global Initiative Conference which is a joint project between Kiva and Visa.  Kiva City is a new way for Kiva to accelerate the growth of U.S. microfinance by empowering communities to join the movement. Each Kiva City will be an alliance between four groups:

1. Kiva – Kiva brings its personal microlending website, with more than 595,000 lenders and over $220 million dollars in total loans.
2. Civic Leaders – Mayors, State and Congressional Representatives, and other elected officials can support Kiva City by publicly declaring their commitment to support the alliance of local partners with Kiva to reach small businesses in need with microfinance loans.
3. Community Organizations – Community groups provide the feet on the ground that find local small businesses, and encourage them to apply for loans through the established field partner in the Kiva City initiative.
4. Financial institutions – A financial field partner will use their time-tested field experience and processes to qualify and administer loans to borrowers.

Here is the video announcement from Bill Clinton:

Here are a few articles to read more about Kiva City:

• Kiva.org, Visa Inc. Launch “Kiva City” in Support of U.S. Small Businesses
• ACCION USA Is a Key Partner on New Kiva.org, Visa Inc. Program to Support of U.S. Small Businesses
• Kiva.org, Visa Inc. Launch “Kiva City”

I got the following email the other day from Kiva.org:

Dear Drew Meyers,

This email confirms that your loan to Koami Dodji Dogba on www.kiva.org
has defaulted.

$20.13 of your loan has been repaid. If possible, further information
about this loan will be posted as an update on the entrepreneur profile
page. http://www.kiva.org/lend/104280?_te=de

We hope that you realize that this default is a true exception to the
norm and that you will give lending to the working poor another chance
on our site.

If you have any questions, you can find our Frequently Asked questions
and our contact info at the Kiva Help Center:
http://www.kiva.org/help?_te=de .

Best Wishes, Kiva Staff

I’ve been donating to Kiva since 2007. The fact that it took 4 years to have a loan default on me? Pretty damn impressive to the success and viability of microfinance.

This article on Kiva News made me smile – Team Australia (all 2,900 of them) just went over $1 million in loans to entrepreneurs around the globe on Kiva.

Makes me feel bad team myKRO.org is so far behind

Here’s a great post by Ryan Calkins over at SeaMO about an interview with Premal Shah, the president of Kiva, and what his expectations are for the next 5 years:

For those in the San Francisco Bay Area, celebrate with Kiva on their 5th birthday on October 13 at the Yerba Buena Center for the Arts.  Tickets are on sale now and going fast!  There will be remarks by Matt Flannery and Premal Shah, along with music, dancing, and a chance to meet Kiva employees and fellows.  For those in the New York City area, the Kiva New York lending team is hosting a party at Royale in Alphabet City.

From their first loan in Uganda in 2005, all the way to today’s 250,000+ loans to entrepreneurs and students on five continents, Kiva has travelled a long road the past five years.  Here are some words for Kiva to help celebrate:

“These past five years the Kiva community has empowered countless families and communities. For our birthday, we’d love nothing more than to spread the word to even more new lenders, so together we can reach even more borrowers… but we need your help to do it.  We’re asking you to invite five new lenders. If you do, you’ll not only help us positively impact more families and communities — you’ll also receive a $25 Kiva credit to loan to whomever you choose.”

Kiva just added student loans to their site, according to TechCrunch. You can now go on Kiva and lend to students to attend higher education in a variety of countries.

Obviously, I’m a huge fan of lending to students in the developing world — hence the reason I’m such a huge fan of Vittana. One question I’m wondering is if Vittana and Kiva are working together on this at all? This seems like an ideal project for Vittana and Kiva to partner on.

Regardless, congrats to Kiva for this announcement — more students having access to higher education can never be a bad thing.