Tuesday, September 02, 2008


As you might know, Jambool partners with Kiva to make loans to needy entrepreneurs around the world -- especially in third world countries. Since we launched the partnership in mid August, we've made loans to over 50 businesses (that's roughly 3 loans a day). You can see more at: http://tinyurl.com/karma2kiva.

Kiva has been great to work with -- simple and effective. In case you don't know about Kiva, it enables peer to peer lending for businesses in developing countries that need small loans. The lenders themselves do not charge or expect an interest on the loan, and more often than not (I think), they don't even expect a repayment. But repayments make it far more sustainable of course.

I also found out about Microplace today -- an EBay owned company -- that also provides a similar peer lending model for needy businesses.

As I found out from elsewhere -- there is a subtle difference between the two. The loans on Microplace are returned with an interest to the lender, and the loans here are securitized -- which implies these loans can be sold to another investor.

The Kiva model seems simpler. Having heard the story of the beginning of microfinance from Mohammed Yunus, it would seem one wouldn't want to tack on interest in order for these loans to work. That said, apparently even the Kiva loans are often given out at an interest to the businesses and it helps support the field operators. I personally find it better that there are fewer people earning interest from the loan given to a needy entrepreneur, and any interest that is indeed paid stays very close to the source.


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