Kiva conducts regular, ongoing monitoring of all Field Partners, but only posts status updates here in response to relevant, major changes at the partner.
 

Status update — March 8, 2016

Due to the economic downturn and unstable political situation over the last few years in Brazil, many clients of Banco Pérola have been unable to make their loan payments, and as a result, their loans have been defaulted. In recent years the Brazilian economy has been contracting, while inflation and interest rates have been on the rise. This has caused many small businesses to collapse. Banco Pérola has felt the brunt of these effects with a 30% default rate on loans financed by Kiva lenders.  

Banco Pérola has suspended their microcredit operations with Kiva as they work to improve their evaluation and collection processes, and as is the case in all default situations, will pass on any future collections to Kiva lenders if a borrower’s’ situation improves and is able to make payments on their loan. 

 

Partner Description:

Banco Pérola is a Brazilian non-profit (OSCIP) that offers microloans, with a focus on youth aged 18 to 35 years old. Its borrowers come from lower and lower-middle class families, and are referred and endorsed by local social organizations.

In 2008, staff at Projeto Pérola, a social organization in Sorocaba (São Paulo state) realized that many of the youth that they served had entrepreneurial characteristics but lacked the capital to make their dreams come true. While Projeto Pérola offers trainings and educational courses to equip these youth with key life skills, it does not provide financial support. Banco Pérola was born to fill this need.




Banco Pérola’s borrowers are endorsed and referred by local social organizations, namely Projeto Pérola. Projeto Pérola serves 50,000 people that fit Banco Pérola’s age group and target market. Of those 50,000, Projeto Pérola estimates that 19,920 have entrepreneurial characteristics and 14,778 are looking to open their own business.

Due to their age, their lack of credit history or their lack of established businesses, Banco Pérola’s borrowers are excluded from the traditional financial system. The organization currently funds a diverse range of businesses, but overall it does more than just provide microcredit: it offers opportunity. Prior to receiving a loan, each entrepreneur receives trainings on how to structure and manage their business. Banco Pérola analyzes the entrepreneurial potential of each potential borrower and assesses the required investment amount. The organization prides itself on its prompt service and streamlined processes. Unlike most lending institutions, Banco Pérola does not exclude borrowers who have bad credit or no credit and instead of real collateral, loans are backed by a solidarity guarantee between small groups of borrowers.
 
A note on Banco Perola’s portfolio yield:

We care deeply about the cost that Kiva borrowers pay for their loans, which is why fair pricing is a core part of our initial due diligence process for Field Partners. With Kiva's 0% capital, many of our Field Partners are also able to add additional value to their loans by reducing interest rates, offering non-financial services or creating new loan products.

For partners with reported portfolio yields or average APRs higher than 50%, Kiva takes steps to check that the high rates are justified by the impact of the loans. Kiva also verifies that the partner is not generating unreasonable profits or paying inflated salaries, and that the partner’s elevated operating costs are justified by its operating environment and/or the design of its loan products.

We seek to support loans that don’t impose an unjustifiable cost burden on hard-working borrowers. We nevertheless recognize that in order to reach vulnerable and excluded people with high-impact products and services, some of our partners incur high costs that necessitate charging higher-than-average costs to borrowers in order to allow for sustainability and scale. 

Factors that drive up the costs that this partner organization charges its borrowers include:

  • They provide very small loans. This leads to higher operating costs, since providing each individual loan presents a minimum per-unit cost.
  • They’re a small company or organization that hasn’t yet achieved the scale and efficiency necessary to reach sustainability and reduce pricing, but the impact of their services merits the opportunity to prove their business model.

Repayment Performance on Kiva

    This Field Partner All Kiva Partners
  Start Date On Kiva Oct 17, 2013 Oct 12, 2005
Total Loans $91,525 $812,917,975
Amount of raised Inactive loans $0 $344,750
Number of raised Inactive loans 0 164
Amount of Paying Back Loans $8,175 $137,274,375
Number of Paying Back Loans 8 163,157
Amount of Ended Loans $83,350 $675,298,850
Number of Ended Loans 64 835,883
Delinquency Rate 81.56% 9.19%
Amount in Arrears $2,818 $8,346,273
Outstanding Portfolio $3,455 $90,820,056
Number of Loans Delinquent 8 32,940
Default Rate 30.53% 1.27%
Amount of Ended Loans Defaulted $25,446 $8,554,773
Amount of Ended Loans $83,350 $675,298,850
Number of Ended Loans Defaulted 40 22,689
Currency Exchange Loss Rate 4.86% 0.40%
Amount of Currency Exchange Loss $4,447 $3,290,899
Refund Rate 0.85% 0.65%
Amount of Refunded Loans $775 $5,273,250
Number of Refunded Loans 1 5,643

Loan Characteristics On Kiva

    This Field Partner All Kiva Partners
  Loans to Women Borrowers 67.12% 74.67%
Average Loan Size $1,264 $409
Average Individual Loan Size $1,264 $646
Average Group Loan Size $0 $1,818
Average number of borrowers per group 0 7.9
Average GDP per capita (PPP) in local country $12,100 $5,943
Average Loan Size / GDP per capita (PPP) 10.45% 6.89%
Average Time to Fund a Loan 0.42 days 6.79 days
Average Dollars Raised Per Day Per Loan $3,021.50 $60.29
  Average Loan Term 12.74 months 10.96 months

Journaling Performance on Kiva

    This Field Partner All Kiva Partners
  Total Journals 2 398,362
  Journaling Rate 3.08% 40.62%
  Average Number of Comments Per Journal 0.00 0.06
  Average Number of Recommendations Per Journal 0.00 1.39

Borrowing Cost Comparison (based on 2012 data)

    This Field Partner Median for MFI's in Country All Kiva Partners
  Average Cost to Borrower 54% APR 44.00% PY 28.61% PY
  Profitability (return on assets) N/A 5.6% -0.77%
  Average Loan Size (% of per capita income) N/A 9.00% 19.56%

Country Fast Facts

Field Partner Staff

Adriene Garcia Marins
Alessandra Gonçalves de França
Fabio Moraes