Status Update - July 30, 2014

Fondo Esperanza is no longer using Kiva funding. After more than six years, $2.4 million in repaid loans and nearly 10,000 borrowers impacted, Kiva and Fondo Esperanza have ended their partnership. During this time, the organization always made payments on time and has been a strong and reliable Lending Partner. We thank them for their years of collaboration and hope to work with them again in the future. 

Original Partner Description:

Fondo Esperanza (FE) is a socially-oriented microfinance institution that provides financial services to micro-entrepreneurs in Chile. The institution serves the poorest sectors of the Chilean economy, and is currently one of the largest MFIs in the country, providing solidarity micro-loans to financially vulnerable populations. Its main objective is to alleviate poverty in Chile by incubating small businesses and providing a holistic range of microfinance services through communal banking.

Currently, Fondo Esperanza has 47 offices throughout the country, 66,000 clients (87% of them women), and a repayment rate of 99%.

FE provides loan plans and entrepreneurship classes to help borrowers achieve success. Loan amounts start at US$100 and gradually increase from one loan cycle to the next. Loan installments are paid off on a weekly or bi-weekly basis.

Fondo Esperanza started its Entrepreneurship School with the goal of providing its clients with better, more varied educational tools. This school is one of the fundamental pillars of support enabling low-income clients to grow their small businesses. Through a well-established Adult Educational Plan, entrepreneurs have access to weekly or bi-weekly classes. The promotion of social networks also creates and strengthens connections between entrepreneurs, communal banks and the local community.

Fondo Esperanza’s unique lending approach:

Fondo Esperanza funds economic activities through its communal banking methodology. Communal banks are groups of 15 to 25 people who live in the same area and join together in order to collectively receive small loans. Group members provide one another with a solidarity guarantee of repayment, meaning that if one member does not repay their loan, the rest of the group will. Each group member runs an independent business. Communal Banks are based on five fundamental principles: solidarity, responsibility, trust, honesty and respect.

Each communal bank serves as a weekly or bi-weekly meeting space for members to track repayments, monitor the evolution of group members’ businesses, and receive entrepreneurial education lessons.

Groups engage in a variety of different activities intended to strengthen each participant’s skills and nurture the networks that connect entrepreneurs important community contacts. These meetings are coordinated by Communal Bank Advisors (ABC, “Asesores de Bancos Comunales”) on Fondo Esperanza’s staff.

The video below is in Spanish, but is highly recommended for those who want to learn more about Fondo Esperanza:

Repayment Performance on Kiva

    This Lending Partner All Kiva Partners
  Start Date On Kiva Dec 28, 2009 Oct 12, 2005
Total Loans $2,477,050 $1,958,960,270
Amount of raised Inactive loans $0 $198,810
Number of raised Inactive loans 0 174
Amount of Paying Back Loans $0 $161,515,145
Number of Paying Back Loans 0 189,106
Amount of Ended Loans $2,477,050 $1,768,242,580
Number of Ended Loans 880 2,370,068
Delinquency Rate 0.00% 12.15%
Amount in Arrears $0 $12,196,492
Outstanding Portfolio $0 $100,379,645
Number of Loans Delinquent 0 72,762
Default Rate 0.21% 1.83%
Amount of Ended Loans Defaulted $5,266 $32,307,398
Number of Ended Loans Defaulted 9 84,791
Currency Exchange Loss Rate 0.00% 0.50%
Amount of Currency Exchange Loss $92 $11,998,745
Refund Rate 0.69% 0.54%
Amount of Refunded Loans $17,025 $10,526,300
Number of Refunded Loans 7 9,596

Loan Characteristics On Kiva

    This Lending Partner All Kiva Partners
  Loans to Women Borrowers 93.62% 78.24%
Average Loan Size $254 $392
Average Individual Loan Size $919 $589
Average Group Loan Size $4,099 $1,891
Average number of borrowers per group 17.9 8.3
Average GDP per capita (PPP) in local country $19,100 $5,599
Average Loan Size / GDP per capita (PPP) 1.33% 7.00%
Average Time to Fund a Loan 1.69 days 8.93 days
Average Dollars Raised Per Day Per Loan $150.87 $43.86
  Average Loan Term 3.48 months 11.47 months

Journaling Performance on Kiva

    This Lending Partner All Kiva Partners
  Total Journals 640 1,178,680
  Journaling Rate 67.39% 42.25%
  Average Number of Comments Per Journal 0.10 0.02
  Average Number of Recommendations Per Journal 0.11 0.57

Borrowing Cost Comparison (based on 2012 data)

    This Lending Partner Median for MFI's in Country All Kiva Partners
  Average Cost to Borrower 34% PY 18.00% PY 27.02% PY
  Profitability (return on assets) -5% -1.8% -3.10%
  Average Loan Size (% of per capita income) N/A 8.00% 0.00%

Country Fast Facts

Lending Partner Staff