Scoring the field offices

[Guest]

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[Fred]

When I started lending to Kiva in November, I didn't pay much attention to the MFI's. I assumed Kiva was doing their due diligence. For the 3 loans to the MFI that I haven't received any payment in over three months, there wasn't any track record with Kiva back then to examine. I'm looking harder at the MFI's now before lending, although I've still made more loans to new MFI's.

It's not that I need the money in a big hurry. But I'd appreciate getting it back so I can reloan it to help out someone else also.   

[BenElberger]

Hey Guys,

Fiona Ramsey, a Kiva staff member, is best to respond here and her response is below.

Ben



All:

Thanks for using the Kiva Friends site as a place to discuss microfinance, Kiva.org and your personal lending experiences.  This website was created by a Kiva Lender for Kiva Lenders and we are so encouraged to see the interesting discussions taking place here.

To answer the question “When is a loan in default?”:
Kiva.org gives two term dates for each loan, a short-term and a long-term date.  The short-term date is the date by which the Field Partner, together with the entrepreneur, expect the loan to be repaid.  However Kiva.org provides soft loans and so we add an additional 4 months to every loan, which becomes the long-term date.  Therefore a loan which has passed the short-term date is considered to be delinquent, and a loan which has passed the long-term date is considered to be in default.

Ultimately, Kiva.org wants the entrepreneurs on our site to be successful  - which includes repaying the loan in full in addition to running a successful business.  We understand that small businesses can encounter set-backs which is why we provide the delinquency cushion before a default has been determined.  When a loan becomes delinquent we discuss the situation with the Field Partner to determine if the entrepreneur simply needs more time or if they have experienced a difficulty from which they will not be able to recover.  Ultimately we want to see these loans succeed and will provide what assistance we reasonably can (such as Kiva Field Reps like Shelby) to assist.

We've been in close contact with WITEP about their repayment difficulties for some time, and Shelby's work has in fact focused on addressing this situation.  Matt Flannery, Kiva's CEO, is also currently visiting WITEP while on a partner visit, and has recruited some local microfinance experts to offer their expertise and get WITEP back on track.  This has really shown us how important it is to have someone on the ground in certain situations, and you can be sure we are 100% focused on taking the appropriate steps to uncover the problems and deal with them appropriately.

Why have we not reported these loans as being defaulted?  Because we want to give both Field Partners and Entrepreneurs the greatest chance at success before doing so, and in this situation that included offering some local support on the ground.  We are doing that right now, and we hope to have some updates on these businesses within the next few weeks as Matt, Shelby and the microfinance experts arrive at some decisions with the WITEP staff. 

Thanks again for being so engaged in your Kiva Loans.  We will always keep information about our partners and businesses as transparent as possible – as you’ve already noticed! 

Finally – we want to give you a heads up that we are working on developing our new Partner Pages for the site which will feature much more information about each partner to encourage more lenders to be as attentive as you have been.  We will be inputting more financial data on each partner and offering analyses to help you make more informed decisions as to who you choose to loan through next.  We encourage you to consider each loan an “investment” and we are working on creating more of an “investment portfolio” feel to the site, making our Partner Pages feel more like a mini prospectus.  Currently our engineers have been working on re-architecting the entire site to handle the traffic increase we’ve been experiencing, which is why we’ve had some feature release delays.

Hope this information cleared up some of your questions!

Fiona Ramsey
Community and Operations Manager

[Ramón]

Ben and Fiona:

Thanks a lot for your answers and clarifications. I especially agree with your remarks about giving Kiva more of an "investment tool" look and feel, as this will instill more confidence in Kiva by the lenders.

--Ramon