Micro-Loans Offer Big Help To Entrepreneurs

Economists call what Kiva does “micro loans.” Jessica Flannery just calls it compassion.
“You start to realize…this is their shot. This is their chance to go from below to above the poverty line for themselves and their families,” she said. “I mean it's not life or death, but it's kind of close.”

That might be why Kiva is growing exponentially. A year ago, they did a $1 million in loans. This year, $15 million, and more than 155,000 lenders.

Kiva is rewriting the book on helping the poor — people like Naiyare Nongepa, a 50-year-old widowed Masai tribeswoman in Southwest Kenya who needed a $1,000 loan and got it from 25 lenders across the globe. 

Naiyare supports a family of five, and lives in a hut made of dung. She plans to use the loan to buy cattle and finish building a new home. 

Naiyare is the leader of five Masai women who all applied for Kiva loans. Some will purchase cattle, but all will buy more brightly-colored beads to make the Masai's highly prized jewelry which they sell to tourists.

A third Kiva borrower, Hezron Maina, the pastor and seed merchant in the small village of Subukia, also received $1,000 from 25 different people.

Before the loan, Hezron lost opportunties through the limited supply he was able to offer. Customers often went away empty handed. That changed when he took a few hundred dollars and used it to buy inventory for his seed store. But with the rest of the Kiva money, he had much bigger plans.

He also leased three additional acres of farmland, adding to the five he already rented for growing corn. With more corn he generated more sales, and enough profit that for the first time in his life he can send his three children to a decent school.

“It helped me a lot because it raised my standard,” he said.  Now I have no problems, such as before.”

Hezron also has had no problems making his monthly repayments. Like Juma and Naiyare, he's on schedule to have his loan paid off within two years. 

Kiva says that's typical of the vast majority of its borrowers. 

"It's really wonderful to be able to look at somebody across the world that you might have thought in a different way about, and look at them as your equal, as your partner, and as somebody that has really kind of impressed you and has blown you away with what they can do with this little bit of money," Jessica Flannery said.

It's a simple but powerful concept — small acts of faith that have changed the lives of thousands of people who aren't looking for a handout — just a hand.

© 2008 CNBC.com

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