Kiva Brings Loan Program to the US

Influenced by the impact of the recession, peer-to-peer micro-loan platform Kiva formally announced this morning that it has expanded it's offerings to include US-based low income entrepreneurs.

According to TechCrunch (who has maybe the best post on the announcement) Kiva President Premal Shah says that the idea first began germinating when California First Lady Maria Shriver visited the Kiva offices and asked whether their loan program could be applied to low income entrepreneurs in the US. While at first Kiva wondered if that really fit in their conception of international development, the recession and the reluctance of banks to make loans in the US has changed their thinking.

The first slate of US entrepreneurs featured on the site features a range of enterprises, from a street corner hot dog stand to a software company designing better tools for architects to a board game store. Even in the time I've been writing this post, some of the loans have been fully funded. These loans run from around $2,000 on the low-end to about $10,000. Like all Kiva loans, the US program is run in conjunction with financial institution partners, in this case microfinance institution ACCION USA and community development financial institution Opportunity Fund.

In a fascinating twist to the story, TechCrunch points out that while other peer-to-peer lending sites like Prosper and Lending Club have gotten into trouble with the SEC for offering a security-like instrument that actually has a rate of return, Kiva is likely fine because they don't have any rate of return, making the funding a charitable donation. This continues to be a fascinating case of where it makes more sense for a social enterprise to stay nonprofit.

Kiva opening its doors to US based entrepreneurs could have serious impact on the way small businesses are funded. Perhaps just as important however, is the message it sends. I can't write it much better than Kiva's blog announcement:

We know there is much more to be done to fully achieve our mission of connecting people throughout the world, but we are very excited about this first step. We look forward to the day when money is flowing in all directions around the world through Kiva: a Guatemalan woman making a loan to an entrepreneur in Detroit, a man in Uganda making a loan to an entrepreneur in Rwanda, and an Italian lending to a Filipino farmer. We are excited about these possibilities and look forward to seeing them become a reality.