Questions about microlending

[jakesteele]

http://www.kiva.org/

Does anybody know about these type of 'micro-lending' type of things?

1. Are they a scam?
2. On average, how much money can you make on each
$100 loan.
3. What is the risk factor?
4. Are some legit?
5. How long before you get paid back?
6. Would you do it yourself?
7. If so, why?
8. If not, why?

In other words, what the skinny scoop on these deals?

[Soapy Sam]

I know they tend to lend small sums, mostly to women, who are less apt to fritter it away than men.
Examples are Pro Mujer in Bolivia and Grameen Bank in Bangladesh- They area basically credit unions. They seem a very positive step.

[Cavemonster]

http://www.kiva.org/

Does anybody know about these type of 'micro-lending' type of things?

1. Are they a scam?
2. On average, how much money can you make on each
$100 loan.
3. What is the risk factor?
4. Are some legit?
5. How long before you get paid back?
6. Would you do it yourself?
7. If so, why?
8. If not, why?

In other words, what the skinny scoop on these deals?

1. No, not the major institutions like Kiva, but they have a lot of small partners and there has been some corruption among them in the past. Kiva acted fairly swiftly to cut ties with fraudulent sub-lenders and pay loans.

2. Micro-lending is not a for-profit exercise, it's charity where you get you money back most of the time. Kiva, for example, does not provide any interest to lenders. You loan $100, you get $100 back. The interest covers operating costs.

And based on your line of questioning, I'm guessing that's where you stop. You don't make money microlending, that's not what it's for.

[Denver]

Kiva seems legit. However, from what I can tell of its procedures, it does not actually lend to individuals. It provides backing of the loans that local 'banks' then make to individuals. These local banks do indeed make a profit. You get to see, sort of indirectly, who your money goes to. But usually, the person has already gotten their loan before you've loaned them your 'backing'.

So when asking about legitimacy, there are at least 3 entities to examine in any transaction: Kiva, the local bank, and the individual.

I've used Kiva, and so far have had no problems.

[timhau]

1. Are they a scam?
2. On average, how much money can you make on each
$100 loan.
3. What is the risk factor?
4. Are some legit?
5. How long before you get paid back?
6. Would you do it yourself?
7. If so, why?



No. Or at least Kiva isn't, as far as I know.
$0.
It probably varies wildly. Do it long enough, and you'll probably run into someone who can't pay you back.
Yes.
It varies. You'll get paid in small installments, over time.
Yes.
Because I like the "Teach a man to fish" -aspect. You may help some folks in far-away countries to lift themselves out of poverty.