Apollio - wow read your post. I didn't realize this:
Quote:
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The average interest rate that a Kiva field partner charges is about 21%, and Kiva.org only partners with microfinance institutions that have a social mission of lending to the poor. To obtain more information about how Kiva.org evaluates and selects its field partners, please see our Risk and Due Diligence center: www.kiva.org/about/risk/overview .
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Hmmm. I don't agree with you that a loan is bad by it's nature. Businesses are all the time started by loans, it's a way to make sure that it's rooted in good business and not just an excuse to get a grant that the person can do whatever with.
However, for me, the question is what would happen if the business fails and the person isn't able to pay back the loan? I'd hate to think there is any kind of hardship on them. For example, in the U.S. if a business fails, then the owners, if they have limited liabilities, aren't personally responsible for the debt of the business, so they can just declare their business bankrupt and move on without any personal hardship other then loss of their business. That is, they don't have to get another job to pay back the debt of their business.
I had assumed it would be the same with Kiva. Maybe I'm wrong? Maybe they consider the loan as personal loan that have to be repaid no matter what, whether the business succeeds or not? If so, I'd hate to be involved with that - I wouldn't want a business loan to be due if the business fails.
On the other hand, these people who are getting the loans know fully what they are getting themselves into. They understand the interest rate, and they prefer to get that loan with the interest rate then staying at their current situation.