Worried about loans expiring unfunded?

[Guest]

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[Jan & John]

For those who like stats and slideshows...

This just posted on the Kiva Blog...

Hi everyone,

First, my name is Dan and I’m a volunteer at Kiva. Over the past two months, I’ve been helping analyze a number of different things from lender behavior to loan and portfolio information.

On Monday’s community call, we discussed the large number of loans which were approaching their expiration date. Out of curiosity, I ran some quick numbers to take a look at loan funding behavior over time (see the slides below).

jan

[Skimmis]

Yeah, if every loan was 90 percent funded, none would be funded! Makes a case for posting fewer at a time!


I think if loans start to expire, people will start putting more money on a particular loan, rathern than $25 hear and $25 there.

Dottie b

Not a very big problem with partially founded loans
http://www.kiva.org/app.php?page=businesses&status=Expired&sortBy=Most+Recent

[Skimmis]

The MFI funds most of the loans outside Kiva.
The MFI partner is already funding the part of the loans that doesnt fund. All you have too do is put your refunded money into a loan from the same MFI, problem solved..

And as soon as Kiva fixes the popularity logaritm and takes away credits for new loans,
fewer loans should expire because when they get partially funded they move up on the popularity page, and those that do expire will be less or not funded.

[AccountAbility]

The MFI funds most of the loans outside Kiva.
The MFI partner is already funding the part of the loans that doesnt fund.

I've seen this assertion before on another thread.  It doesn't make sense, unless you are aggregating all the month's loans from one MFI Field Partner into one block and saying that they will fund the whole block regardless of what portion Kiva lenders don't fund.

But at least on paper, a particular entrepreneur's loan is either funded from Kiva lenders or it isn't.  If it isn't funded through Kiva, the Partner uses (used) its own capital to fund all of that particular loan.

Dan

[cpbailey]

I think I know what is meant by that whole :

Quote from: Skimmeland on Today at 04:22:45 AM
The MFI funds most of the loans outside Kiva.
The MFI partner is already funding the part of the loans that doesnt fund.


First of all, some poor guy is really, really tired and is explaining what is really clear to an insider.  It just needs some Kiva cultural translation! 

"The MFI funds most of the loans outside Kiva."  TRANSLATED means that Only 30% of all an MFI's funds can be via Kiva.

"The MFI partner is already funding the part of the loans that doesnt fund. "  TRANSLATED means that the MFI pre-funds all or virtually all loans, so the borrower will get the loan regardless of Kiva lenders.  Our money replenishes funds used to make the loans which Kiva funds.

A corollary is that if we do not fund a bunch of loans and the MFI's fund from which they pre-fund the loans is depleted, then they have a cash shortage.  This would mean that they would have to wait for repayments to make new loans.  Two other ways this fund shortage happens: defaults which are not covered by Kiva's lenders and repaying when there is a currency loss.

Colette

[Skimmis]

2141 Fundraising loans today.
That must bee a new record?

[luckyjudy]

I'm still puzzled.  What DOES happen if a loan goes unfunded?  There seem to be a few that are precariously close at the moment?

[alan]

Hi Luckyjudy and Welcome!

There are two scenarios if a loan goes unfunded. If it has been pre-disbursed (the majority of cases), that is, paid to the borrower before it was posted on Kiva, then the borrower has the money in hand and the MFI loses out on the refinancing of the loan. So the primary harm here seems to be to the MFI, which was expecting an infusion of capital that does not come through. If the loan has not been pre-disbursed, then the consequences are undefined. It may be that the MFI finds capital from somewhere else to fund the loan request (Kiva is not the only source of capital for any MFI), but we just don't know definitively.

Either way, it has a negative impact on the ability of the MFI to provide funding for the next loan, and the effort and cost of posting the loan on Kiva are wasted. Obviously this is not a good thing.

 

[Skimmis]

2128 loans online now.
New record?