How are people in Mexico seeking loans to remodel their homes entrepreneurs?

[Guest]

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[CV]

I have noticed a whole lot of individuals in Mexico seeking loans to remodel or finish construction on their personal homes.  I am confused....isn't Kiva supposed to be about loans to entrepreneurs?  Also, as a frequent visitor to Mexico and a lender interested in lending to people in that country, I've noticed that most people seeking a loan for construction already have a house made of stucco/concrete and a built floor....in many parts of Mexico this is already considered a luxury.  I'm not saying these people don't deserve a better house, I'm just wondering how their request eneded up on Kiva?

[cpbailey]

This is a somewhat controversial issue with some.  Kiva's main statements discuss entrepreneurs, but under the about section it states, "Kiva's mission is to connect people through lending for the sake of alleviating poverty."

My interpretation is that most of the homes are social interest homes.  These are low income homes that are very standardized and quite small.  I don't know specifics on square footage or room count.  However, most people move in and then try to make the space work for them.  Perhaps an extended family is crowded into two or three bedrooms.  If they could have had an additional bedroom and paid more, this option wasn't available regardless of family size.  The homes are designed such that small additions can be made and the house incrementally improved to meet the needs of the occupants.  So there might be a loan to lay the cement down.  The next loan might be to build walls.  Then a roof.  Then doors, windows, and finishing touches (electrical goes in somewhere). 

Is it luxury?  Perhaps compared to some places with dirt floors.  However, as long as there is a huge difference in living standards between the US and Mexico, there will pressure to immigrate to find a better way of life.  The bigger the difference, the more conflict over this issue there will be.  Mexico has the same issue with relative affluence with some of its southern neighbors.  Many people in Tajikistan go to Russia to send money home as jobs are scarce.

So it is a personal choice what to support.  Each of us has different sets of values and experiences.  Kiva is about offering borrowing opportunities to improve standard of living for those who don't have many viable options to borrow elsewhere. 

I try to spread it around a bit.  I don't mind helping build a larger house or even tile instead of cement.  I am not crazy about the bars as I don't know if they are quick release.  Bars can prevent people from leaving a house in case of fire.  So I don't fund bars.

Realistically, if a business has $1500 in assets, the owner could sell $1200 worth of merchandise and not replace the products.  Then he would be able to tile the bedroom or do an addition.  Then he could get a Kiva loan for the business.  This would be "improving the business by increasing products available for sale."  This would meet the strict entrepreneurial funding we prefer, but under this plan it would mean that the business would not have the variety or selection while the sales without replacement took place.  Overall, it is a bad business choice to play the Kiva loan game.

Colette

[CV]

Thanks for the thoughtful reply Colette.  You bring up a really good point about the "Kiva loan game" in your last paragraph.  Great food for thought.

[Tatiana]

Realistically, if a business has $1500 in assets, the owner could sell $1200 worth of merchandise and not replace the products.  Then he would be able to tile the bedroom or do an addition.  Then he could get a Kiva loan for the business.  This would be "improving the business by increasing products available for sale."  This would meet the strict entrepreneurial funding we prefer, but under this plan it would mean that the business would not have the variety or selection while the sales without replacement took place.  Overall, it is a bad business choice to play the Kiva loan game.

Colette

Good point Colette!