Overview

Why are you interested in becoming a Trustee?

Currently, this borrower does not have a trustee. However, they have undergone our rigorous review process and required “social underwriting” process where they obtained an endorsement from their personal network in the form of Kiva microloans. When we first launched the Kiva U.S. program, all borrowers were required to secure an endorsement from a Trustee, an individual or organization who publicly vouched for the character of each borrower. Since 2011 we’ve been continuously striving to innovate, iterate and improve on our model, especially around the idea of social underwriting. In January 2013, we rolled out the Private Fundraising Period, which requires U.S. borrowers to recruit 5-30 lenders from within their network of friends and family in order to have their loan posted on the public Kiva website. This innovation makes borrowers accountable to their personal social networks, which has markedly improved our repayment rate. As borrowers invite lenders from their own network, they are able to establish their credibility and reputation in their community before we promote them on the public Kiva lend tab. When we first launched the Kiva U.S. program, all borrowers were required to secure an endorsement from a Trustee, an individual or organization who publicly vouched for the character of each borrower. Since 2011 we’ve been continuously striving to innovate, iterate and improve on our model, especially around the idea of social underwriting. In January 2013, we rolled out the Private Fundraising Period, which requires U.S. borrowers to recruit 5-30 lenders from within their network of friends and family in order to have their loan posted on the public Kiva website. This innovation makes borrowers accountable to their personal social networks, which has markedly improved our repayment rate. As borrowers invite lenders from their own network, they are able to establish their credibility and reputation in their community before we promote them on the public Kiva lend tab.

What is the mission of your organization?

There is no organization backing this borrower. However, Kiva’s mission is to make loans to many small business owners that conventional underwriting would reject. The other way in which social underwriting enables us to expand access to capital is because it is practiced by a community of thousands of people, rather than a centralized financial institution. The financial institution is usually focused on maximizing profits, so it has a very low tolerance for risk. The community of thousands of people is lending in tiny increments (e.g. $25 at a time), and is more motivated by creating a positive impact in the life of a borrower whose story resonated with them, or financially and emotionally supporting a small business in their own neighborhood, so they are able to tolerate a higher risk of default on the loan. Our repayment rate target for Kiva U.S. is 90%, not 100%. Because we believe that if we really want to make a difference for entrepreneurs in places like inner-city Detroit or the Mississippi Delta, we need to accept higher risks than profit-seeking financial institutions are willing to stomach. When you combine the ability of social data to plug information gaps that conventional underwriting does not account for, with the patient, risk-tolerant, generous capital of Kiva's community of lenders more motivated by social impact than financial return, you are able to say yes to a much higher proportion of loan applications than financial underwriting permits.

Borrower Due Diligence

How will you decide who to endorse as a borrower? What due diligence will you conduct?

If you have more questions on social underwriting, please visit the following page https://borrow.kiva.org/faq#