The borrower’s side of the controversy: no time to wait!
By Julia Kastner, KF9 Mexico
Often while out interviewing borrowers for a new Kiva profile, the first question is “WILL THIS SLOW DOWN MY LOAN??”
Fortunately, my answer is “No, don’t worry! Kiva will repay your MFI, not make you wait!” This is only true, however, because of Kiva’s controversial policy of allowing its MFI partners, like my partner, Fundacion Realidad (FRAC) to make loans before receiving Kiva funding. So, why are borrowers so afraid of delays?
By the time FRAC’s loan officers can take a picture for Kiva, a group needs to have been officially formed and the loan contract needs to be finalized and signed. This can take weeks if the group hasn’t organized itself yet. Then FRAC requires a minimum of 10 days to process the paperwork, perform reference checks, etc. before disbursing the loan. Other MFIs and loan sharks will give same-day loans, but at much higher interest rates. Waiting for Kiva funding, though, could take over a month. Profiles have to be written, translated, and THEN wait for funding.
Why is timing so important to a borrower? Well, how would you feel if you had to wait a month every time you wanted to use your credit card?
Borrowers have all kinds of time pressures – bills to pay (for their business and/or their household), crops to plant in the right season, food to cook before market day, handicrafts to sell before the Day of the Dead or Christmas, and sometimes (unfortunately) other loans to pay off. They’ve applied for a microloan because they don’t have access to cash all the time, and the longer they wait, the more interest they’re going to have to pay someone. So they’re thrilled that Kiva isn’t going to slow them down!/>