Safia baji, the wife of Mr. Z., has lived in Chichawatni, Pakistan since her childhood. She owns a three-room mud house and is the mother of two sons. Her elder son, Ali Raza, is 5 years old and in kindergarten. She recently successfully completed her first loan from Asasah (a microfinance institute of Pakistan). Her husband is a fruit seller and now she is applying for a loan to buy more fruit for his business.
She is joined in her loan group by four other members: Maryam baji wants a loan for her shoe business; Shamshad baji wants to buy wood for her furniture business; Suraiya baji wants to purchase a sewing machine, while Samina baji wishes to buy fruits.
This is a group loan. The loan funds will be distributed among the group members, each of whom will invest in her own business. The members guarantee one another's loans, so if one member does not repay, the other members are responsible.
This is a Group Loan
In a group loan, each member of the group receives an individual loan but is part of a larger group of individuals. The group is there to provide support to the members and to provide a system of peer pressure, but groups may or may not be formally bound by a group guarantee. In cases where there is a group guarantee, members of the group are responsible for paying back the loans of their fellow group members in the case of delinquency or default.
Kiva's Field Partners typically feature one borrower from a group. The loan description, sector, and other attributes for a group loan profile are determined by the featured borrower's loan. The other members of the group are not required to use their loans for the same purpose.