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Lending to the poor online involves 3 levels of risk

98.88%
Repayment rate for $204,138,225
in ended loans 		Of the $204,138,225 of loans with completed loan terms, the repayment rate is 98.88%. (Note that this repayment rate is not necessarily indicative of borrower repayment rates since many Kiva Field Partners chose to guarantee or cover individual borrower defaults).

However, past repayment performance does not guarantee future results. When you lend money, you may lose all or some of your principal. You should be aware of the different types of risk and find the right loan option for you, with respect to repayment risk and social return.

Risk 1: Entrepreneur Risk

Each entrepreneur is screened by a local Kiva Field Partner (Microfinance Institution) before being posted on Kiva's website. The Field Partner looks at a variety of factors (past loan history, village or group reputation, feasibility of business idea, etc) before deeming the entrepreneur as credit worthy. However, a number of factors can result in entrepreneurs defaulting:
  • Business issues (e.g. crop failure)
  • Health issues (e.g. malaria, HIV/AIDS)
  • Other issues (e.g. theft, paying for school fees, over indebtedness, reduced remittances, civil disturbances, etc.)
If an entrepreneur defaults, our Field Partners should pursue collections according to their normal practices.

* Learn more about the Field Partner's role in screening entrepreneurs and administering your loan.

Risk 2: Field Partner Risk

When you lend to an entrepreneur, Kiva delivers the funds to the local Field Partner (please refer to net billing system). While working with Field Partners increases the likelihood that your loan will be effectively used and repaid, new institutional risks are introduced such that even if a Kiva Entrepreneur is able to repay, Kiva Lenders could still lose principal due to, for example:
  • Bankruptcy (e.g. the Field Partner may go out of business and be unable to collect your loan)
  • Fraud (e.g. staff members at the Field Partner may embezzle funds)
  • Poor operations (e.g. The Field Partner may have poor methodologies for screening entrepreneurs or collecting repayments)
To help you assess this risk, Kiva assigns each Field Partner a 1-Star (higher risk) to 5-Star (lower risk) Risk Rating.

* Learn more about Kiva's role in rating, and monitoring the risk of each Field Partner.

Risk 3: Country Risk

    When lending internationally, it is important to consider "macro-level" risks:
  • Economic (e.g. a large currency devaluation or the institution of exchange controls by local governments may render the Field Partner's local currency collections valueless for you).
  • Political (e.g. many Kiva loans are made in the developing world. Policies can change regarding funds repatriation or even the requirement that microfinance borrowers have to repay their loans.
  • Natural disasters such as a tsunami or drought may greatly reduce the likelihood of loan repayment from certain countries or from specific regions in a country.

Kiva currently targets a country limit of no more than 10% of total loans outstanding to help ensure a balanced portfolio. In certain instances, guaranty mechanisms may be used in excess of this limit on a case by case basis.

* Learn more about the Field Partner's role in dealing with severe currency devaluations.