Late Loaning Lenders thread

Discussion in 'Kiva | Loans That Change Lives' started by jbcarioca, Sep 30, 2011.  |  Print Topic

  1. jbcarioca
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    jbcarioca Gold Member

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    This is a Kiva team dedicated to finding loans that are about to expire then funding them. This thread is for discussion about why that is important and how to do that type of lending.

    Here is their Kiva team url:

    http://www.kiva.org/team/late_loaning_lenders
     
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  2. milchap
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    milchap Gold Member

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    Good idea. :cool:
     
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  3. YULtide

    YULtide Gold Member

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    There's a Team FAQ here.
     
  4. estnet
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    estnet Gold Member

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    I just tried using the advanced search function to look for expiring loans but it didn't seem to work:(
     
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  5. miles and smiles
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    miles and smiles Gold Member

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  6. milchap
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    milchap Gold Member

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    This is a must read. Very informative piece.
     
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  7. milchap
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    milchap Gold Member

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    I noticed that many Iraq loans were close to the expiration date.
     
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  8. jbcarioca
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    jbcarioca Gold Member

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    There are two loans expiring today and a few others that have only two days left. I have just funded one of them and made loans to two others. Please follow the link in post #5 above that miles and smiles posted and make some of these loans before they expire!
     
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  9. milchap
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    milchap Gold Member

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    1.5 What happens to money already lent when a loan expires? Is the loan partially funded?

    When a loan expires, every lender who has supported it receives an e-mail notification and a refund. The Field Partner does not receive the funding it had expected for that loan. There is no mechanism on Kiva to provide partial funding for an expired loan.



    1.6 When a loan expires, does that mean the borrower doesn’t get his or her (or their) funds?

    Generally, no. Most loans are advanced (“Pre-disbursed”) by the field partner prior to being listed on Kiva. So the borrower already has the loan in hand and expiry will not affect the client. In cases where the loan has not been advanced prior to being listed on Kiva, the field partner may be able to fund the loan with other capital that it has on hand. Kiva limits field partners to funding 30% of their loan portfolio with Kiva funds.



    1.7 If the borrower still gets the loan, then why is expiry a problem?

    Although expiry of loans is not an immediate problem for the entrepreneur(s), we believe that it is a problem for the Field Partners, and hence for future entrepreneurs, and for Kiva.

    Field Partners advance funds to entrepreneurs with the expectation that these loans will ultimately be financed by Kiva lenders. Before loans began expiring, this expectation was extremely certain, so the Field Partners could have great confidence that a loan request posted on Kiva would mean that funds would be provided by Kiva lenders to reimburse the amount they had advanced to the entrepreneur. But with expiry of loans comes uncertainty for the Field Partners, who now risk not being reimbursed for loans advanced. As with all risk in financial circles, this risk comes with a cost. For example, the Field Partner may have to fund the loan from another, non-Kiva, source of funds, which may involve higher interest charges. (Kiva provides funds interest-free, which is of obvious benefit to Field Partners.)

    The cost is likely to be passed on to other entrepreneurs, who might not receive a loan because the funding for it is not in place, or who might have to pay a higher interest rate to compensate for the higher risk. Or the Field Partner might become less able to provide other, non-loan services. If the risk of expiry becomes significant, it might also make Field Partners more hesitant to advance Kiva-related loans.

    In addition to the somewhat indirect cost associated with risk of expiry, it also carries direct costs because the posting of a loan on Kiva costs the Field Partner time and energy (and hence money), which is wasted if the loan request expires.

    If Field Partners suffer or begin to bear extra costs associated with expiry of loans, then they will be inevitably less able to help other entrepreneurs. This goes against the primary goal of all three partners in this enterprise: Kiva, Kiva lenders, and the Field Partners. The goal for all three is to help people to build better lives by providing them with access to microcredit.

    With respect to the borrowers, expiry of a loan may send an unintended message that there is something wrong with their projects that means that they don't merit being funded. We believe that every loan merits being funded, and every borrower deserves the opportunity to improve his or her life.
     
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  10. YULtide

    YULtide Gold Member

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    Thanks!
     
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  11. YULtide

    YULtide Gold Member

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    Thanks, Miles and Smiles.

    For others wondering how to find these loans, you can always find loans near expiry by using the sort drop-down menu at the top right-hand corner of the loan list. The default is "Popularity". Choose "Expiring Soon" to sort by oldest to newest. The LLL team believes that if a critical mass of lenders simply sorted by oldest first before choosing a loan (using whatever other criteria they want), the problem of expiring loans would be drastically reduced. Anecdotally, it seems that many are doing so.

    Full disclosure: I'm a LLL team captain.
     
  12. miles and smiles
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    miles and smiles Gold Member

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    Welcome to Milepoint!
     
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  13. SC Flier
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    SC Flier Gold Member

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  14. KyRoamer
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    KyRoamer Gold Member

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    Many borrowers are repeat borrowers. They fund a season's inventory, seed, etc. They pay back and then borrow again. If we do not cover the Field Partner, what will happen when that borrower needs his or her next loan? Don't know but funding has to help.
     
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  15. KyRoamer
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    KyRoamer Gold Member

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  16. canucklehead
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    canucklehead Gold Member

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  17. KyRoamer
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  18. Toula
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    Toula Gold Member

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    I am going to commit that every month, at least one of my loans will be to the loan closest to expiring.
     
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  19. Randy Petersen
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    Randy Petersen Founder

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    thanks for the tip, I just joined in with you. He still needs more help.
     
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  20. jbcarioca
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    jbcarioca Gold Member

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    I joined too. If you will post the LLL loans only in this thread, KyRoamer, I pledge to loan to your next four recommendations!
     
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  21. canucklehead
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    canucklehead Gold Member

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    That's make 6 MPers (yourself, kyroamer, Randy, me - WHY, sendaiben and BryanIAH)

    Don't forget the one I posted - http://www.kiva.org/lend/331093 - only 2 days left on this gentleman's loan!
     
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  22. jbcarioca
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    jbcarioca Gold Member

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    Also done. Thanks for reminding me.
     
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  23. YULtide

    YULtide Gold Member

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    You are all amazing! Thank you all for your dedication. :cool:
     
  24. KyRoamer
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    KyRoamer Gold Member

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    Aldolfo's loan funded. Thanks to all who helped.
     
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  25. estnet
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    estnet Gold Member

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    I think I figured out why I didn't think it worked - I had preselected women and at least judging from today, there are very few women with expiring loans (maybe none the day I first tried), but LOTS of men with expiring loans
     
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