Being a Dad often feels like being a bank to the family, and the most popular transactions tend to be withdrawals! But this weekend I upped my game and became an International Commercial Banker.
I've made a loan to a Samoan sewing business to be repaid over a term of 18 months. Maybe. I've never met Freida Lisa Makesi (pictured), the businesswoman who took out the loan, which has been granted with no security or guarantee, and for which there is no interest payable (back to me).
Ok, I'll come clean. I signed up with a microloan site called Kiva. The money at stake is only USD$200, and I'm partnering with 15 other people to provide the full value of the $850 loan that Freida's business needs to buy a sewing machine.
Kiva is an interesting way to link those of us for which a couple of hundred bucks is not a life-changing amount, with those for whom it most certainly is. The website details a number of needy businesses that have applied for microloans under conditions that a 'real' commercial bank would not touch. You use your own criteria for selecting the borrower, and lend them any amount from $25 up to the full loan amount.
As the loan is repaid you get to see the payments being returned as credit to your Kiva account. From there you can withdraw the money for a new gadget you don't really need, or lend it out again to help another business move one small step up the ladder. Of course, you may never see the money again for any number of reasons, not least is that the mortality rate in the countries supported is way higher than where YOU probably live, or the borrower simply disappears with the money; but the field workers who administer the loan on your behalf select the borrowers based on their experience, and have an remarkably low defaulting rate on the loans they arrange.
I have a structured approach to my charitable giving, but this is the first time I've tried lending money to a worthy cause. I'll let you know how it goes, but Freida Lisa Makesi has to be a better risk than my daughter for making good use of the money, and maybe paying it back!