To ensure a thorough due diligence process, Kiva reviews Direct Loan applicants based on key eligibility criteria, financial history, and community support.

Eligibility criteria:

• Borrowers lack access to financial services for their business (financially excluded).

• Borrowers demonstrate social impact through their business model.

Financial history: Kiva conducts several checks to prevent fraud, assess financial viability, and evaluate the borrower’s potential for impact. These steps include:

• Researching their business online.

• Verifying PayPal account details.

• Screening applicants through the Office of Foreign Assets Control (OFAC) terrorism database as a security precaution.

Kiva goes beyond traditional financial assessments by incorporating social underwriting. This process evaluates a borrower’s character and community support alongside financial history to help gauge creditworthiness.

The power of social networks

• A borrower’s friends, family, and community involvement can increase their commitment to repayment.

• Borrowers may be supported by Kiva Trustees or members of their personal network.

The role of Kiva trustees

• Trustees are community organizations that identify and endorse credible borrowers.
While they may not have lending experience, they have personal connections with the borrower.

• Kiva uses a tiered system that allows Trustees to endorse more borrowers as their past recommendations successfully repay their loans.

• To maintain their ability to endorse, Trustees must uphold a target repayment rate. However, Kiva may make exceptions for organizations with a strong history of partnership.

Before a Direct Loan goes live on Kiva’s public site, most borrowers must first secure support from their own network during a private fundraising period.

Why? It helps demonstrate borrower commitment and community trust.

How many lenders? Between 0 to 40, depending on:

• Loan size

• Potential social impact

• Trustee endorsement

Kiva is actively testing this process, so not all borrowers are currently required to complete a private fundraising period.

Kiva closely tracks repayment rates for all Direct Loan borrowers. While Trustees play a role in encouraging repayment, they aren’t held to the same level of oversight as Lending Partners. However, their ability to endorse future borrowers depends on the repayment success of those they've previously supported.

Unless the borrower's business is in the agriculture industry, in which case they receive a 6-month grace period before their first loan repayment, Kiva U.S. borrowers have their first repayment due exactly one month after receiving their loan.

What happens when a borrower is behind on repayment?

• Kiva sends multiple reminders via phone and email.

• Borrowers who fail to repay or default are not eligible for future Kiva loans.

• A loan is defaulted if the total amount repaid is less than expected six months prior.


What happens if a loan is defaulted?

• Loans are defaulted monthly, and lenders receive email notifications.

• Kiva may exempt loans from default if:

  • Extenuating circumstances are found.

  • There’s a high likelihood of future repayment.

• Any unpaid amount should be considered a loss by contributing lenders.

• Borrowers can still make payments after default, but Kiva does not follow up on these loans.

Kiva advocates for its lenders

Each Direct Loan comes with its own risks, and Kiva encourages lenders to understand these risks before deciding to lend.