[Apollia]

Originally Posted by seeker5

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.

Yes, I will admit it's possible to give a loan with good intentions - even though I think the effects of a loan compared to a gift generally aren't as positive, no matter what the intention.

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.

Same here.

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.

Hmm, interesting, I didn't realize that's how business debts work in the U.S. Good to know - so things aren't quite as bad in the U.S. for people trying to start a business as I assumed.

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?

I wish I knew the answer. I suppose Kiva's "field partners" (lenders) might all have different policies, but, I don't know if the precise terms given to the borrowers by each field partner are available on the Kiva website.

I found this page on Kiva which gives some clues of how things are done, though:

http://www.kiva.org/app.php?page=hel...entPerformance

Some quotes:

"Entrepreneurs are required to join borrowing support groups -- which chip in when a group member is unable to repay on time."

"The Field Partner may occasionally use their own reserves to make Kiva lenders whole, even if the entrepreneur is past due." (So, if I'm not mistaken, that means the default and delinquency rates on the website might be quite inaccurate).

"For loans that are delinquent at the end of a loan term, Kiva allows the Field Partner 6 additional months to attempt collections before deeming the loan as Defaulted."

So, it looks like they might engage in collections efforts instead of letting the borrowers off the hook if their businesses fail.

If so, I'd hate to be involved with that - I wouldn't want a business loan to be due if the business fails.

Same here.

Best wishes,
Apollia