Kiva Zip is an attempt at direct peer-to-peer lending, using a model similar to what Lending Club and Prosper use. Kiva Zip deals directly with the borrower. The move is designed to reduce the interest rates that borrowers pay, by eliminating the need for an MFI to serve as an intermediary and by electronically distributing funds and collecting payments.

Here’s what Kiva has to say about Kiva Zip:

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:

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.

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.

Unfortunately, lenders will have to deal with higher risk when participating in the Kiva Zip program. MFIs do a number of things to lower the risk of loans made and to help ensure repayment. Without MFIs acting as an intermediary and with Kiva using a new model for microfinance, lenders that participate in Kiva Zip are signing up for a lot more risk.

Here’s what Kiva has to say about the risk of Kiva Zip:

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.

P2P-Banking also covered this story.

This article (Kiva Launches Experimental Direct Microfinance Website) was originally developed by and is property of Peer to Peer Lending News. Checkout P2P Lending News for the latest social lending, microfinance and financial innovation news.

Here’s a press release Kiva issued to commemorate its anniversary:

SAN FRANCISCO, CA, Oct 19, 2011 (MARKETWIRE via COMTEX) — From a small group of friends and family who liked the idea of being able to loan $25 to a farmer in Uganda, to loans made to nearly every major country in the world totaling nearly $250 million, Kiva has in six short years become the world’s largest personal micro-lending website, and is celebrating its sixth anniversary by honoring the more than one million site users who have brought microfinance to a level never before possible.

“It’s not an overstatement to say that we are truly in awe of our lenders, who over the course of the past six years, have demonstrated how strongly they believe in the power of using the Internet to help alleviate poverty, one loan at a time,” said Matt Flannery, co-founder and CEO of Kiva. “If someone would have told me in 2005 that by 2011 more than a million people would become part of the Kiva community, and a majority of them make loans to nearly 650,000 entrepreneurs via our platform, I’m not sure I would have believed them. But it has happened — and for this incredible success, we have our lenders to thank.”

Since its public launch in October, 2005, Kiva has achieved an array of milestones, including:

–  Distributing more than $250 million in loans to entrepreneurs in 60 countries around the world.

–  Attracting more than 20,000 “lending teams” — self-organized groups with shared philosophies and lending goals. The top 10 Kiva lending teams have each made more than $1 million in loans.

–  Enlisting more than 550 global volunteers, including Kiva’s Fellows, translators and editors.

–  Attaining more than 140,000 Facebook fans and 430,000 Twitter followers.

–  Adding new categories of loans, including Student Loans and Green Loans.

–  Opening up Kiva loans to entrepreneurs in the U.S., and launching Kiva City, a first-of-its-kind program that encourages local citizens to lend to local small businesses.

–  Putting together a Board of Directors that includes executives across the philanthropy, social networking, software and Internet spaces. To learn more about Kiva’s board, visit http://www.kiva.org/about/team/board           

     “I’ve observed Kiva since its nascent days, and what makes the organization so special is its unique ability to bring together this true community of lenders — from every background, every religion, every socioeconomic position and every point of view — who’ve joined for a common goal of bettering the world by helping entrepreneurs improve their lives,” said Geoff Davis, former CEO of microfinance accelerator Unitus, who recently re-joined Kiva’s Board of Directors. “It’s a combination of talent, ingenuity, effort and enthusiasm rarely seen in the nonprofit or for-profit world.”

About Kiva Kiva is the world’s first personal micro-lending website, empowering individuals to lend to an entrepreneur across the globe. Founded in 2005, Kiva’s mission is to alleviate poverty by connecting people through lending. Currently more than 630,000 people have loaned more than $250 million to 642,000 entrepreneurs in 60 countries. Kiva is headquartered in San Francisco.

This article (Kiva Celebrates 6 Year Anniversary, Facilitates $250 Million in Microloans) was originally developed by and is property of Peer to Peer Lending News. Checkout P2P Lending News for the latest social lending, microfinance and financial innovation news.

The new initiative was announced by former President Bill Clinton last week on stage at the Clinton Global Initiative America conference in Chicago. The Kiva City initiative aims to drive job growth and economic recovery by connecting Kiva’s global network of 592,000 individual lenders with the owners of small businesses throughout the country.

“Since launching in the U.S. two years ago, we have worked with our partners to replicate our successful global model, empowering each and every American to help our economy by adding as little as $25 to a small business owner’s loan,” said Premal Shah, president of Kiva.org. “But as our study shows, the needs in the U.S. are widespread and many regions simply don’t have microfinance institutions operating at scale. Now, spurred by Visa’s commitment to small business, we are able to expand our reach and, as a result, open new avenues of capital for small business owners across the country.”

There are currently very few microfinance institutions operating at any sort of scale in the United States. Kiva City believes that it will be able to create a microfinance movement by connecting local communities, particularly those that have been hardest hit by the economic downturn, to their small businesses. For this reason, Kiva is launching the program initially in Detroit, which has faced economic hardship for the last several decades.

Kiva City loans in Detroit will provide an additional option for small businesses that are seeking capital. The loans can be used to fund operations, ranging from purchasing equipment and paying rent, to hiring and retaining employees, to offering promotions.

The loans made to Detroit small businesses will come by way of a partnership that Kiva made with ACCION USA, which is part of the ACCION Network. “ACCION USA is the vital link between Kiva lenders, communities and the small business owners in Detroit who need our help,” said Gina Harman, President and CEO of ACCION Network in the U.S. “With the visibility, community group connections and committed loan funds provided by Kiva, we believe Kiva City and its launch in Detroit will serve as a model for bringing solutions to more cities across America.”

Detroit became the first Kiva City in partnership with Michigan Corps, a social network of local and global Michiganders committed to positive change in their home state. “Through our partnership with Kiva and ACCION USA, we’ve been able to bring the tools of microfinance to our neighborhood businesses so that they can invest in their growth. Through local networking events, church gatherings, and neighborhood BBQs, we have built an engaged community of small business owners and lenders alike. Detroit is proud to be the pioneer of the Kiva City model.” said Anuja Jaitly, co-founder and executive director of Michigan Corps.

This article (Kiva.org and Visa Partner on U.S. Small Business Loans) was originally developed by and is property of Peer to Peer Lending News. Checkout P2P Lending News for the latest social lending, microfinance and financial innovation news.

Borrowers are seeking green loans on Kiva for very diverse reasons. International farmers are seeking loans to create organic fertilizer. Some are seeking to get loans to convert vehicles to run on bio-fuel and others are seeking loans for devices, such as solar panels, that generate renewable energy. Most of the green loans that are facilitated on the site are provided to individuals in developing countries, but some loans do go to individuals in the United States.

“When we talk to people [about switching to energy-efficient technologies], one of the issues is financing. More people might buy a Prius if the financing is 0% APR. It’s the same kind of dynamic that plays out with low income households,” said Kiva President Premal Shah to Fast Company.

Shah said told Fast Company that the loans make sense for a number of reasons. “The Internet community is willing to channel money, it’s just more patient, lower-cost, and risk-tolerant capital,” said Shah. “If the Internet funds [Green Loans] quickly, it will send a signal that there is demand to fund loans in this category which will in turn change behavior around the world.”

The non-profit has facilitated more than $200 million in microloans to entrepreneurs since the organization began operations in 2004. More than 500,000 entrepreneurs have received loans from Kiva and the company says that 98.7% of loans are repaid. 81.4% of the loans on the site made to female entrepreneurs.

This article (Kiva Now Offering Green Energy Loans to Entrepreneurs in Developing Countries) was originally developed by and is property of Peer to Peer Lending News. Checkout P2P Lending News for the latest social lending, microfinance and financial innovation news.

The microfinance non-profit has seen significant growth since its launch in October 2005. The company said in a recent press release that it “has evolved into a marketplace for lending that extends beyond entrepreneurs in developing countries to include loans in the United States and a pilot student loan program.” Lenders on the website have made a total of 570,000 loans to more than 531,000 entrepreneurs in 59 different countries around the world.

Kiva.org President Premal Shah commented, “Reaching an additional $100 million in loans in just over a year is a tremendous achievement for us and speaks to the passion of the Kiva community.” He added, “In the past year, we have successfully leveraged the Kiva platform to reach new microloan markets like loans for students and, in the future, will look to new categories that contribute to the alleviation of global poverty like green and water loans. This would not be possible without the support of our partners, volunteers and lenders, who have played a significant role in making Kiva what it is today, so we would like to take this opportunity to thank you.”

The company has rolled out a number of growth initiatives during the last year. In September 2010, the service launched a pilot student loan program in Bolivia, Paraguay and Lebanon. In October 2010, Kiva partnered with Visa and Accion Texas-Louisiana to offer additional growth opportunities for U.S. small businesses. Kiva launched joinFITE.org in January 2011 in order to help move the Kiva platform “into retail environments and other offsite experiences, providing a new vehicle for micro loans to women entrepreneurs”

In the last year, Kiva established its presence for the first time in South Africa and Jordan through new local field partners, and also added new field partners in the Congo, Kenya, Honduras, El Salvador, Nicaragua and Colombia.

This article (Kiva Reaches $200 Million in Microfinance Loans) was originally developed by and is property of Peer to Peer Lending News. Checkout P2P Lending News for the latest social lending, microfinance and financial innovation news.

In Kiva‘s July newsletter, they promoted a video called “If I Had $25“, a play on the Barenaked Ladies hit “If I Had $1,000,000“, created by johnbr2, a musician from Decorah, Iowa:

The song is both Kiva-accurate (buying yaks and looms), well-sung, and hilarious. An interlude that discusses the “cultural imperialism” of Kraft dinner is particularly funny.

Among the highest-quality user-generated content, Zopa Italy takes the cake with entries from their Zopacontest, held in November 2007 to promote the upcoming launch of their site. Many entries are professional and captivating, but the winning entry went to Silvia Casali for her beautiful animation:

Lending Club‘s video contest back in 2007 to promote the fledgling Facebook-based site yielded a bunch of entries, and the first place, $3,000 winner was the well-produced “Teddies” video, featuring a small-businessman-with-medical-bills storyline. Among the lot of excellent videos was one without fancy production value, but lovable in its honesty, titled “The Worst Entry For The Lending Club Video Contest“:

Back in 2007 a song entitled “Prosper Panhandler song” was posted by an artist called Underwater Bass Player. The bluesy ballad focuses heavily on Prosper‘s now defunct user forums, and in the song, the author agonizes over which Prosper group to pick before eventually settling on one called “Everyday People“:

What other good social media have you seen related to P2P lending? Share it in the comments.

This article (The Best of P2P Lending Community Content) was originally developed by and is property of Peer to Peer Lending News. Checkout P2P Lending News for the latest social lending, microfinance and financial innovation news.

Because Kiva works exclusively with microfinance institutions (MFIs), they are not accepting loan applications from credit-starved Americans via their web site, in the same way that Lending Club or Pertuity Direct might. Rather, Kiva has partnered with Accion USA and Opportunity Fund to provide American borrowers looking for small business loans, and has raised the maximum loan amount available for Americans from the worldwide max of $3,000 to $10,000.

During this pilot phase of U.S. lending, 18 borrowers from New York and 18 borrowers from San Francisco are vying for loans on the Kiva site. You can see all of the loans here. At the moment, only 29 of the 36 loans are left, and all but one loan have some level of funding.

Some of the loan requests include video, such as this one from Luis, a baked goods deliveryman in New York:

As with loans made to entrepreneurs in other countries, Kiva doesn’t pay lenders interest on their loans, although never before have the actual interest rates from the MFI’s been so easily discovered: according to Accion USA’s small business loans page, interest rates range from 8-15%, and The Opportunity Fund’s small business page shows rates starting at 8%.

So where is the interest going? Presumably to the MFI for servicing the loan (both also take fairly high origination fees in the 3% range), and hopefully to Kiva for bringing the capital and promoting the MFI’s services. If Kiva maintains their status as a PR juggernaut (to date there are 138 articles in Google News), I imagine that the attention will flood Accion USA and Opportunity Fund with inquiries.

What I haven’t seen in any of the press so far is any mention of Microplace, eBay’s interest-yielding microfinance play. Which is interesting because Microplace already offers microlending to American entrepreneurs through MFIs like ACCION Texas, Habitat for Humanity, and yes, ACCION USA. And the ACCION USA investment via the Calvert Foundation is currently yielding 2.0% interest.

This article (Kiva Launches Lending to U.S. Borrowers) was originally developed by and is property of Peer to Peer Lending News. Checkout P2P Lending News for the latest social lending, microfinance and financial innovation news.