Risk and Due Diligence

Risk Overview | Field Partner's Role | Kiva's Role | Your Role | Risk Statistics

Lending to the poor online involves 3 levels of risk

0.3%
Default rate for $7,833,760
in ended loans

Of the $7,833,760 of loans with completed loan terms, the default rate is 0.3%. 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 repayment, etc) If a default occurs, Kiva's policy requires our Field Partners to be fully transparent about the reason(s) behind it. * 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 wires the funds to the local Field Partner to administer your loan. While this necessary intermediary increases the likelihood that your loan will be effectively used and repaid, new risks are introduced: 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 (high risk) to 5 Star (low risk) Risk Rating. * Learn more about Kiva's role in rating, auditing and managing the risk of each Field Partner. * Learn more about your role in understanding Kiva's risk indicators to find a loan opportunity that's right for you.

Risk 3: Country Risk
		When lending internationally, it is important to consider "macro-level" risks: Economic (e.g. a large currency devaluation renders the Field Partner's local currency collections valueless for you). Political (e.g. Kiva works in Iraq, Afghanistan and other unstable areas. Funds repatriation may be difficult if central government policy changes) Natural (e.g. a tsunami or flood may greatly reduce the likelihood of loan repayment)

Risk and Due Diligence

Lending to the poor online involves 3 levels of risk

Risk 1: Entrepreneur Risk

Risk 2: Field Partner Risk

Risk 3: Country Risk