Neither a borrower nor a lender be;
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.
– Shakespeare, Hamlet
Shakespeare is often a source of wisdom. This bit, from father to son, is oft quoted and overly broad. I encourage you to become a lender.
To who? What for? How? Why? I’ll let you answer the first two. How and why is the subject of this page.
If you’re reading this you are probably a member of the minority with the great fortune to be born into (in world terms) the affluent US. Life is easy here. Consider what would had happened if the odds had played out: you’d be a poor Chinese citizen. Or you might be one of the three billion people who live on less than two US dollars a day. That’s less than most Starbucks menu items. That’s likely much less than the cost of the gasoline you used to drive to work today. Two Bucks? That’s … I want to say “nothing”, but it is something. However it is such a small amount that no one I know would blink over paying $2.00 for something they want. To over half the people in the world however it is all they have to buy food, shelter, clothing and medical care each day.
In many impoverished areas of the world people work at whatever they can to etch a living. Selling eggs, sewing, baking bread, cutting hair, or operating a tiny store are examples of ventures people undertake to make a better life. Many of these people could expand their business and distance themselves a bit further from grinding poverty with some capital. A little bit of cash, loaned to them, less than, perhaps, you have idling about. This is called microfinance.
A wonderful element of the internet is how cheap it makes communication. In this case how it can link a small bank or investment coop in an impoverished country with people (like me, and like you?) who have money to lend. One option for the link at our end is Kiva. Kiva connects lenders with field partners who make the actual loans. A field partner must have an auditable history of providing financial services and at least 1000 clients. An example of a field partner is Manuela Ramos / CrediMUJER.
For $25 you can be one of a pool of people who loan money to small business in impoverished areas of the world. You choose the person, or group, that you’ll lend your money to. The Kiva website lists applicants with a photo and description of what the capital will be used for. If you want reasonable assurance that you’ll see the money again you can restrict your loans to field partners with clients that have a strong repayment record. Overall Kiva borrowers repay loans 99.8% of the time. That’s a better default rate than credit card lending (Americans had a 4.53% default rate in early 2007) or (I know you’re sick of it) sub-prime mortgage lending in the US. Jennifer and I quickly made eight loans over the Christmas holiday.
The process is dead simple. Choose borrower and a loan amount, and check out. If none of the businesses fit your criteria you can check back in a few hours. Currently loans are fulfilled in an average of less than eight hours. Revisiting the site each day will show a new slate of businesses. When the loan is repaid you can withdraw your money or (our plan) look for more businesses and roll the loans over into new ventures. Inspired by Peter Singer’s writings we’ve ratcheted up our charitable giving. Lending through Kiva is one of the more feel good ways to share our wealth.
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