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100%.

No, Kiva.org does not charge any interest or fees to our Field Partners.

Yes, self-sustainability is critical to creating long-term solutions to poverty, and charging interest to entrepreneurs is necessary for microfinance institutions to achieve this. Our Field Partners are free to charge interest, but Kiva.org will not partner with an organization that charges exorbitant interest rates. We also require Field Partners to fully disclose their interest rates. You can find more information about the interest rates that Kiva's field partners charge on our partner pages: www.kiva.org/about/partners/ .

Microfinance is an expensive business, which is essentially the reason small loans are not provided by large banks. While Kiva.org's Field Partners do not bear the cost of capital or the cost of default, they do bear transaction costs and currency risk. Charging interest to entrepreneurs enables our Field Partners to bear these costs and achieve self-sustainability.

The average interest rate that a Kiva field partner charges is about 21%, and Kiva.org only partners with microfinance institutions that have a social mission of lending to the poor. To obtain more information about how Kiva.org evaluates and selects its field partners, please see our Risk and Due Diligence center: www.kiva.org/about/risk/overview .

The nature of microcredit " small loans " is such that interest rates need to be high to return the cost of the loan. To quote (CGAP) (Consultative Group to Assist the Poor):

"There are three kinds of costs the MFI has to cover when it makes microloans. The first two, the cost of the money that it lends and the cost of loan defaults, are proportional to the amount lent. For instance, if the cost paid by the MFI for the money it lends is 10%, and it experiences defaults of 1% of the amount lent, then these two costs will total $11 for a loan of $100, and $55 for a loan of $500. An interest rate of 11% of the loan amount thus covers both these costs for either loan.
The third type of cost, transaction costs, is not proportional to the amount lent. The transaction cost of the $500 loan is not much different from the transaction cost of the $100 loan. Both loans require roughly the same amount of staff time for meeting with the borrower to appraise the loan, processing the loan disbursement and repayments, and follow-up monitoring. Suppose that the transaction cost is $25 per loan and that the loans are for one year. To break even on the $500 loan, the MFI would need to collect interest of $50 + 5 + $25 = $80, which represents an annual interest rate of 16%. To break even on the $100 loan, the MFI would need to collect interest of $10 + 1 + $25 = $36, which is an interest rate of 36%. At first glance, a rate this high looks abusive to many people, especially when the clients are poor. But in fact, this interest rate simply reflects the basic reality that when loan sizes get very small, transaction costs loom larger because these costs can't be cut below certain minimums." (CGAP)

Kiva.org currently sends 100% of your loans to the borrowers listed on the site. However, self-sustainability is critical to us. To this end, we support ourselves principally on the "optional fees" our lenders voluntarily pay to the organization in addition to the loans they make. Based on this income stream alone, we are currently self-sufficient. In the future, as the needs of our charitable cause dictate, we are open to considering additional revenue streams such as partnership fees.

Lastly, we have raised growth capital from a small group including Silicon Valley angel donors, corporate sponsors and foundations such as the Draper Richards Foundation and the Kellogg Foundation. We are incredibly thankful for this support that has helped us keep up with a fast pace of growth.

Yes, in fact, there are two. The first is Kiva.org. When you lend through Kiva.org's website, the funds are sent to Kiva.org via PayPal. From Kiva.org the funds are sent to the second middle man, our Field Partner, who will manage the loan including distributing funds and collecting repayments. When the Field Partner receives the funds, they are then distributed to the entrepreneur.

Repayments are made from the entrepreneur to the Field Partner on a schedule determined by the Field Partner. As each repayment is collected, the Field Partner enters the repayment amount into our software over the internet, notifying Kiva.org and the lenders that a repayment has been made. Kiva.org invoices Field Partners quarterly for all repayments they have collected over the previous quarter. When the entire loan has been repaid in full, Kiva.org credits the lenders for their portion of the loan, and lenders can choose to reloan or withdraw their credit.

The two middle men, Kiva.org and the Field Partner, are crucial to enabling this loan process to operate as efficiently and as cheaply as it does. By dividing and conquering -- Kiva.org collecting and distributing loan funds through the website and Field Partners managing the loans on the ground -- we leverage the skills we each have to provide loans at much cheaper rates than alternative sources of debt capital.

Loan funds received by Kiva.org are forwarded, by check or international wire, to the respective Field Partner on a monthly basis. The Field Partner then distributes the funds to the entrepreneur. Some of our Field Partners have working capital, which they forward to an entrepreneur when they see the business has been fully funded online, before the payment arrives from Kiva.org. This allows the business to start operating sooner.

Kiva.org does not send loan funds directly to the entrepreneurs. Each loan is managed by a microfinance institution that we partner with and that administers the loan funds.

Before an entrepreneur appears on our website they have first been vetted by our Field Partner for loan application approval. Each of our Field Partners uses their own application procedures, which Kiva.org has reviewed and approved. This ensures that your loan funds are actually going to genuine entrepreneurs who will use the loan for the purpose they specified.

For more information, please visit our Risk and Due Diligence center: www.kiva.org/about/risk/overview .

Our Field Partners choose the entrepreneurs whose business loans are posted on our website. Each Field Partner uses their own application vetting process, reviewed by Kiva.org to confirm that the organization has the ability to handle Kiva.org's funds responsibly. Each business loan is reviewed by Kiva.org before going live to the site to ensure appropriate content.

All loans can fundraise for up to a month on the Kiva website. If a loan is not fully funded within a month, all contributing lenders will be refunded and notified by email.

Kiva allows individuals to make choices about who they would like to support with their loan funds.  Lenders show their support by contributing to a loan request, and most loans are funded within a matter of days.  However, if a loan is not fully funded within 30 days, the loan request automatically expires, and our Field Partner can consider the characteristics of the loan that resulted in a lack of support from Kiva Lenders.

In many cases, the entrepreneur is not directly affected, as the Field Partner managing the loan can choose to fund the loan from another of its funding sources. Kiva's Field Partners fund the loans they facilitate from various sources, including grants, loans, savings, Kiva etc.

In fact, it is common for Kiva's Field Partners to use existing capital reserves to fund an entrepreneur and backfill this amount with the loan funds raised on the Kiva website.  In these cases, expiration can ultimately negatively impact Kiva's Field Partners.  The potential impact is less reserves for the Field Partners, which may reduce their ability to lend to more of the poor in their communities.

Kiva.org receives new businesses from our Field Partners every day, so if you don't see a business that matches your preferences, check back tomorrow. The exciting thing is that Kiva.org is operating in real time, so we are receiving loan applications and posting them on our site as they are coming in from the field. Our loan requests are funded quickly, so if you see a business you like, make a loan, or it just might be gone next time you're on our site.

All loans can fundraise for up to a month on Kiva's website. If a loan is not fully funded within a month, all contributing lenders will be refunded.

No, loans made through Kiva's website do not earn any interest.

Kiva's loans are not an investment and are not recommended as an investment. Providing interest to our lenders is legally complex.

However, we may provide this option in the future in accordance with U.S. law and regulations.

No, a Kiva loan is not considered a donation because it is possible you will receive your money back. Kiva cannot assure, however, that your loan will be repaid or that you will recover any of your principal. Your donations to Kiva the organization, unlike the loans made the entrepreneurs, are tax-deductible

Lending at Kiva involves risk and Kiva does not guarantee lenders that their loans will be repaid.

To date, Kiva.org's repayment rate is 99.70%. However, past repayment rates may not necessarily reflect future repayment rates or the likelihood of repayment by any particular entrepreneur.

By lending to multiple entrepreneurs, rather than simply lending to one entrepreneur, you may be able to increase the likelihood of repayment. We call this "loan diversification".

Each time a repayment is made on your loan, you will receive an email notifying you that funds were deposited into your Kiva account as Kiva credit. Then you can re-lend your funds, donate them to Kiva, or withdraw them to a PayPal account.

Kiva’s repayment system is designed to accurately reflect the way that our Field Partners collect funds from the entrepreneurs that you’ve supported with loans.

When one of Kiva’s Field Partners uploads an entrepreneur’s loan request to Kiva, they set the anticipated repayment dates for the loan and the date that the loan is set to be disbursed to the entrepreneur. This repayment schedule can be monthly, once at the end of the loan term, or whatever most accurately reflects the way that the entrepreneur will be making repayments.

Our Field Partners have until the end of the month that each anticipated repayment is due to let Kiva know whether or not they actually collected the repayment. Once we have all of this information, we use it to generate a bill to charge our Field Partners for all of the repayments they collected that month.

To speed things up and to minimize the number of wire transfers being sent overseas, Kiva works on a net billing system. This means that, for any given month, we subtract the amount of repayments that a Field Partner owes to Kiva lenders from the amount that a Field Partner fundraises for entrepreneurs on Kiva.

If the balance is positive, that means that the Field Partner has raised more than they need to repay, and we use those funds to credit your lender account with the repayments due to you.

If the balance is negative, then the Field Partner has 30 days to send us a payment for the balance. As soon as we receive that payment, we use those funds to credit your lender account with the repayments due to you.

Once the repayment is made into your Kiva account, you can re-lend the funds, donate them to Kiva’s operating expenses, purchase a gift certificate or withdraw them into a PayPal account.

When one of Kiva’s Field Partners uploads a loan request to Kiva, they provide Kiva with a schedule of repayments that they anticipate the entrepreneur will make. At the end of every month, Kiva requires that our Field Partners indicate whether or not they’ve collected these repayments from the entrepreneur. They have a 15 day grace period after the end of the month to do so.

After this 15 day grace period, we bill our partners for all of the repayments that they indicate they’ve collected. Our Field Partners then have an additional 15 days to make a payment to Kiva so that we can deposit the repayments into your Kiva account.

For example, if a Field Partner posts a loan with the first repayment on January 10th, we ask them to indicate whether or not they’ve received this repayment by January 31st.

On Feburary 15th, at the end of the grace period, we generate a bill to the Field Partner for all of these repayments.

The Field Partner then has until March 1st to pay this bill before we mark the payment on Kiva as delinquent.

If a partially repaid loan is declared in default (it is determined the entrepreneur cannot repay the rest of the loan), the repayments collected so far will be distributed to the lenders proportionate to their contribution to the loan. In short, Kiva.org never keeps any of the funds, we always send 100% of funds loaned to the partner, and 100% of funds repaid are returned to the lenders.

A loan will not be considered delinquent until the due date for the most recent repayment has passed without a payment.

In microfinance, it is common to try to reschedule loans in delinquency and default in order to accommodate the eventual repayment of the loan. At Kiva, we define default (non-repayment) as 6 months after the official due date of the loan. At that point, we "write-off" the loan, and it is moved from delinquency to default on the balance sheet.

Each of Kiva's Field Partners operate a little differently, and while some need to wait for Kiva to wire the loan funds to them before they can disburse the loans, others have funds on hand - from savings or working capital - that they can use to front the funds before they receive the funds from Kiva.

In some cases, Kiva's field partners use their own working capital reserves to fund a loan up to 30 days before it is funded on Kiva's site. Then the funds raised on Kiva's site essentially backfill this working capital. Some Field Partners report that this is important since they don't want to make their client wait for a loan request -- but they only do this because they are highly confident that if posted on Kiva, the loan will be fully funded.

This is why the loan disbursal date can vary, from up to 30 days after the loan is funded, to even before the loan was funded on Kiva.

You can diversify your loan portfolio by lending to multiple entrepreneurs. For example, you can make a $25 loan to four entrepreneurs (e.g. loan diversification) or a single $100 loan to one entrepreneur (non loan diversification). If one of the four entrepreneurs defaults and the others do not, you may still get $75 back whereas if the single entrepreneur defaults you may not get any of your money back.

We do not believe that you need to report Kiva loans on your IRS tax returns because the loans posted on Kiva do not accrue interest.

However, we are not in a position to provide tax advice. Therefore, please consult with your tax counsel regarding the deductibility rules that apply to you.

Defaults are not considered a charitable donation to Kiva. Please consult with your tax counsel to see if you may be able to deduct the loss of the loan that defaulted.