Microloan Basics
Microloans are small loans given to the poor to help them be self-sustaining by starting small businesses. These loans help them, even though they don't have credit. Kiva is one of the leading websites that facilitates the flow of microloans.
Purposes
Microloans serve two purposes. The first is to instill in the poor that they can free themselves from poverty. The second is to aid in the alleviation of poverty by helping loan recipients start small business projects. Lenders are individuals who pledge a certain amount of money to loan out to a deserving entrepreneur in another country. These loans are administered through Kiva, which forwards the funds to microfinance institutions worldwide.
Repayment
When the money reaches the microfinance institution, a lending officer lends this money out to the entrepreneur. However, the process doesn't stop there. Employees of the microfinance institution provide resources and training to these entrepreneurial individuals, so that they will able to succeed in their business and be able to use the loan wisely. Later on, the borrower repays the loan to the lender. Between the time of the loan and the repayment, Kiva assists in updating the borrower on the progress of their loan. When the loan has been repaid, lenders can either withdraw their money or start the cycle again.
