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General Kiva Zip Questions

What is Kiva Zip?

Kiva Zip is part of Kiva.org. It is a small project through which lenders make microfinance loans directly to borrowers in the U.S. and Kenya via the Internet. Kiva Zip was launched as a pilot in November 2011 and moved into its Alpha testing phase in September 2012.

What are the aims for Kiva Zip?

There are three principal aims for Kiva Zip:

  1. Expand financial opportunities and access for borrowers who otherwise lack them
  2. Reduce the cost of capital for borrowers who need it
  3. Enhance the connectedness between lenders and borrowers

Where will Kiva Zip be located?

Kiva Zip currently serves borrowers in Kenya and the United States. We chose Kenya because of the high penetration of the M-PESA mobile payments platform and because Kiva office has a in Nairobi. We chose the United States because we believe that the we can foster meaningful connections between borrowers and lenders. In the future, we hope to see the Kiva Zip model expand into other geographies.

How small is a “small” pilot project?

As of the end of August 2013, the Kiva Zip pilot had disbursed loans to about 1,400 borrowers via about 15,000 lenders. This compares to over 600,000 loans made on Kiva.org to-date by over 1,000,000 Kiva.org lenders.

What are Conversations?

Conversations are a way for borrowers, lenders and trustees to interact with each other directly on the Kiva Zip website. There is a Conversations tab on every loan page. Since we launched the Conversations feature, we have seen lenders expressing support for borrowers to whom they have made loans, borrowers and trustees updating lenders on their progress, borrowers marketing their businesses and products to lenders. In August 2012, we launched the ability for users to post images to the Conversations tabs of loans.

Who can participate in Conversations?

Kiva Zip administrators, the borrower and trustee related to a particular loan, and all lenders to that loan can participate in that loan's Conversation at all times. While the loan is fundraising, borrowers can choose to make the Conversation open to all users. This enables all users to both view the Conversation and comment.

What are some guidelines for posting in Conversations?

The Conversations Tab on each Kiva Zip loan is for borrowers, lenders, and Trustees to have honest, respectful, and meaningful dialogue about the opportunities, pitfalls, and progress of a borrower’s loan. To ensure that these communications are productive, Kiva Zip has simple guidelines for appropriate subject matter for the Conversation’s Tab.

Some examples of subject matter that is appropriate for Conversation’s Tab includes the following:

  • Updates about the progress of the loan, the borrower’s business, or Trustee
  • Endorsements of the borrower or Trustee
  • Questions to the borrower regarding the viability of his or her business plan
  • Advice or feedback regarding the borrower’s business plan
  • Messages of goodwill or appreciation

Please avoid posts with following subject matter:

  • Topics that are irrelevant to the loan and the borrower’s business, which includes general feedback about Kiva, Kiva Zip, or any Trustees that are not specific to that particular loan
  • Aggressive self promotion that is not associated with the borrower’s personal story, business, loan, or Trustee
  • Suggestions to the borrower that they do not have to repay the loan or can pay at a different repayment schedule than the one listed on the loan profile
  • Degrading, threatening, or disrespectful language to any individual or group
  • The contact details of a person other than yourself

The Kiva Zip Team reserves the right to remove conversations posts that violate these guidelines. Frequent violation of these guidelines by a single user will lead Kiva Zip to freezing the user’s account.

For wider discussions about Kiva Zip not specific to a particular loan, please follow this link to find our lending team message board. There, you can interact with staff to provide feedback about the Kiva Zip and engage in discussions with other Kiva Zip lenders.

What are Borrower and Trustee Badges?

Borrower and Trustee Badges are a system designed to recognize and reward borrowers’ and trustees’ engagement with the Kiva Zip website.

There are two types of badges that are tiered like medals: Gold, Silver and Bronze.

  1. 'Repayment badges' are awarded for the on-time repayment of loans.
  2. 'Connectedness badges' are awarded for engagement with the Kiva Zip website.

What do I do if I have forgotten my Kiva Zip password?

Please follow this link to reset your Kiva Zip password.

Why has the Kiva Zip login process changed?

The login process for Kiva Zip lenders changed as of March 2013 to allow them to use their Kiva.org credit on Zip (and vice versa).

The login process for Kiva Zip borrowers and trustees has stayed the same.

How do I log in to Kiva Zip?

Borrowers and trustees: Click here to log in to Kiva Zip. Next, click on the grey “Trustee/Borrower Log In” button on the right of the page. Enter your Kiva Zip email address and password.

Lenders:The first time you go through the Kiva Zip login process, it will work as follows:

For users who are new to Kiva.org and also new to Kiva Zip:

  1. Visit https://www.kiva.org/login to start the registration process.
  2. Register as a new Kiva.org user by clicking the “Register” link at the top right of the Kiva.org/Login page.
  3. Click on “Zip” along the top.
  4. You will be brought back to the Kiva Zip website automatically to create a Kiva Zip account.
  5. Your Kiva.org and Zip accounts will be linked.

For existing Kiva.org users who are new to Kiva Zip:

  1. Log in to your Kiva.org account by visiting https://www.kiva.org/login.
  2. Click on “Zip” along the top.
  3. You will be brought back to the Kiva Zip website automatically to create a Kiva Zip account.
  4. Your Kiva.org and Zip accounts will be linked, and you will be able to use your Kiva.org credit to make Zip loans.

For existing Kiva.org users who have used Kiva Zip before:

  1. Click here to log in to Kiva Zip.
  2. Click on the orange “Lender Log In” button on the left of the page. You will be taken to the login page on the Kiva.org website.
  3. If you use the same email address for both your Kiva.org and Kiva Zip accounts, you will be asked to enter your Kiva Zip password to verify and link your Kiva Zip and Kiva.org accounts. Your Kiva.org and Zip accounts will be linked, and you will be able to use your Kiva.org credit to make ZIp loans (and vice versa).
  4. If you have different email addresses for your Kiva.org and Zip accounts, you can still easily link them. When you are automatically brought back to Kiva Zip after logging in to your Kiva.org account, just click the link that says “Already a Kiva Zip user?”, click the button in the dialog box that appears, and enter your Kiva Zip email address and password.

For existing Kiva Zip users who are new to Kiva.org:

  1. Click here to log in to Kiva Zip.
  2. Click on the orange “Lender Log In” button on the left of the page.
  3. Register as a new Kiva.org user by clicking the “Register” link at the top right of the Kiva.org/Login page.
  4. You will be brought back to the Kiva Zip website automatically to link your Kiva.org and Zip accounts by entering your Kiva Zip password.
  5. Your Kiva.org and Zip accounts will be linked, and you will be able to use your Kiva Zip credit to make loans on Kiva.org (and vice versa).

Questions For and About Kiva Zip Lenders

Why do lenders make loans on Kiva Zip?

There are a variety of reasons why lenders make loans on Kiva Zip. Some lenders appreciate the ability to give a financial opportunity to an entrepreneur. Other lenders want to help the small business just down the street.

Kiva Zip lenders do not receive financial returns; there is 0% interest on the loans they make.

What are the risks involved with lending on Kiva Zip?

Lending money on Kiva Zip can be risky. You should only loan money on Kiva Zip that you can afford to lose. There is no guarantee that you will get it back.

Default Risk: If a borrower defaults on a loan, the lender loses his/her entire investment. There are many reasons why a loan might not be paid back, ranging from poor execution of a business plan, to the borrower experiencing a catastrophic accident, to fraud on the part of the borrower or the trustee.

Unknown Variables Risk: Because Kiva Zip is a relatively untested project, there are unknown variables and risks that continue to be discovered now and will be discovered as the project is established over its first couple of years.

Exchange Rate Risk: The exchange rate of the Kenyan Shilling against the US Dollar is liable to change on any given day – in either direction.

To explain what will happen if the exchange rate changes in either direction, let’s take an example of a 100 USD loan, which initially converts into 10,000 KSH in January.

If the US Dollar appreciates against the Kenyan Shilling over the course of the year, this means that the US Dollar will buy more Kenyan Shillings in December than in January. So when the borrower comes to repay their 10,000 KSH in December, it might only convert into 96 USD. In this case, the Kiva Zip lender will take on the foreign exchange loss. If a Kiva Zip lender made a 25 USD loan in January, they will only get 24 USD back in December.

If the US Dollar depreciates against the Kenyan Shilling over the course of the year, this means that the US Dollar will buy fewer Kenyan Shillings in December than in January. So when the borrower comes to repay their 10,000 KSH in December, it might convert into 104 USD. In this case, Kiva Zip would take the foreign exchange gains, and put them into a specially-designated fund to support Kiva Zip operations.

It was decided to pass the foreign exchange risk on to the lender, rather than the borrower, in order to minimize the hassle and disruption to the borrower (who will always have a significant social need) as much as possible.

While it might seem unfair for Kiva Zip to pass on foreign exchange losses to the lenders, but keep foreign exchange gains, this is not motivated by a desire for Kiva Zip to gain financially. Legally, Kiva Zip is unable to pass on any rate of return to our lenders – this is the principal reason why lenders cannot directly benefit from foreign exchange gains.

Does all of my loan go to the borrower?

For United States loans, the entire amount of the loan goes directly to the borrower.

For Kenyan loans, we build in a buffer between the amount of the loan listed on the website and the amount of the loan requested by the borrower. We do this for two reasons:

First, we currently deal in loan shares of $25. If a borrower requests a loan of 9,000 Kenyan shillings and this converts to 90 US dollars, we round this amount up to 100 US dollars, so that we can easily divide it into four loan shares of $25 each.

Second, there is a chance that exchange rates could fluctuate between the time when the loan is posted, and the time when it is disbursed.

Example: A borrower requests a loan of 10,000 Kenyan shillings, and this converts to 100 US dollars at the time the loan is posted. After we posted the 100 USD loan on the website, the Kenyan shilling appreciated against the US dollar so that a dollar bought only 95 shillings at the time the loan was funded. This would mean that the 100 USD funded by lenders would only buy 9,500 shillings, and this would mean that the borrower is 500 shillings short.

In order to ensure that the experience is as smooth for the borrower as possible, we build in a small currency exchange buffer for Kenyan loans. After Kenyan loans are fully funded, any money that is not disbursed to the borrower is immediately returned to lenders as a “round-up refund”.

Can I connect with the borrower to whom I made a loan?

Kiva Zip does not organize meetings between lenders and borrowers; however, Kiva Zip lenders can communicate directly with borrowers via the Kiva Zip Conversations feature.

How can I invite people to become lenders on Kiva Zip?

You can invite people to become Kiva Zip lenders by following this link.

Can I withdraw my Kiva Zip credit?

It is possible to withdraw your Kiva Zip Credit. All Kiva Zip withdrawals are processed via the main Kiva website. To withdraw your Kiva Zip Credit, you will first need to transfer your funds into your Kiva account.

  1. Click the "Transfer funds link under the “My Funds” section of your Kiva Zip homepage and enter in the amount of Kiva Zip Credit you would like to transfer to Kiva.
  2. Log into your Kiva account at www.kiva.org/login and click "Withdraw" to be taken to the Kiva withdrawal request form.
  3. Enter in the amount you wish to withdraw and the email address associated with your PayPal account to request your withdrawal. Kiva withdrawals typically take 1 week to be processed into your PayPal account. If you have any questions about Kiva withdrawals, please email contactus@kiva.org.

Can I transfer my credit between Kiva and Kiva Zip?

As of March 2013, Kiva Zip lenders can use their Kiva.org accounts and credit to make loans on Kiva Zip. Once Kiva Zip lenders have linked their Kiva Zip accounts to their Kiva.org accounts, any Kiva.org credit will automatically be credited towards Kiva Zip loans in the Zip checkout flow.

Kiva Zip credit can also be transferred to Kiva.org and used to fund Kiva.org loans. To transfer credit from Kiva Zip to Kiva.org, Zip lenders click on their My Zip page and click the “Transfer Funds” link in the "My Funds" section.

Zip lenders can see their current Kiva Zip credit and Kiva.org credit by clicking on their My Zip page.

Can my loans count towards my Kiva lending team?

Unfortunately, it is not possible for your Kiva Zip loans to count towards your Kiva lending team. We plan to build that functionality in the future.

How are repayment rates calculated?

All repayment rates are calculated by dividing the total amount of money currently collected from borrowers by the total amount of money currently due from borrowers.

If a borrower has paid us money in advance, we do not count it as collected from the borrower until that payment becomes due. We do still return this money to lenders as soon as we receive it.

Why is the paying back status of loans obscured once they are fully funded?

Currently, we do not display the paying back status of loans on the Kiva Zip website after they are fully funded unless you are a lender to that loan. We do this to protect borrower’s privacy and to avoid publicly shaming those who might become delinquent.

Can I get a refund for my loan purchase?

Kiva Zip is a pilot program that is committed to transparency and innovation. We believe that aggressive experimentation is the best way to achieve the social impact that we desire. Given the risks involved with direct lending, we commit to reviewing each loan and Trustee through a standard process developed by the Kiva Zip team and to reviewing our processes periodically in order to improve our model. Still, due to the uncertainty of many factors that affect a loan’s repayment, it is difficult to predict when one will fail to be repaid.

Given these risks, the Kiva Zip team will not refund a lender’s loan purchase under any circumstances. This includes the following situations:

  • Delinquency or default of a borrower
  • Poor performance of a Trustee’s endorsements
  • Lack of updates and/or Conversations posts by the borrower, Trustee, or Kiva Zip
  • Suspension of a Trustee or borrower from Kiva Zip due to changes to Kiva Zip’s risk management policies

As a lender, do I have to pay any fees to use Kiva Zip?

Kiva uses PayPal to process all of its lender financial transactions. Kiva is the first organization that PayPal has supported by providing free payment processing. This support saves Kiva up to one million dollars each year, which helps us to keep our operational expenses low and send 100% of the loan contributions of our lenders to Kiva Zip borrowers.

As a result, U.S. lenders should not incur any fees by lending on Kiva Zip.

Lenders outside the United States may be charged a fee to convert their local currency into U.S. dollars, Kiva's working currency.

Questions For and About Kiva Zip Borrowers

What are the benefits to borrowers of using Kiva Zip?

The primary benefit of a Kiva Zip loan is often that it was made available when other sources of funds were not. Kiva Zip aims to expand opportunities for borrowers, thereby enabling them to achieve the goals they have for their businesses.

Another benefit for borrowers is that Kiva Zip loans have zero interest, which makes them a great deal for borrowers!

There might also be some marketing benefits to borrowers from listing their businesses on the Kiva Zip website if lenders extend their support beyond the loan to become customers of the business.

Many Kiva Zip borrowers appreciate the personal connections that they develop with each of the lenders funding their loan. Kiva Zip is designed so that the borrower can get to know the lenders through their profiles, just as the lenders get to know the borrower before deciding to make the loan.

Finally, leveraging electronic payment systems such as Paypal and M-PESA in conjunction with online application forms can save borrowers time and allow them to focus their energy on running their businesses.

For some examples of some of our first US borrowers' feedback on their loans, please see this blog post.

What borrowers qualify for a Kiva Zip loan?

There are a number of criteria, as assessed by trustees, that borrowers must meet in order to qualify for a Kiva Zip loan.

In the United States, these criteria are as follows:

  • Borrowers cannot currently be in foreclosure, bankruptcy, or under any liens
  • Borrowers must be endorsed by a Trustee. The Trustee must DEEPLY TRUST the character of the borrower they are endorsing and his or her commitment to repay the loan
  • The borrower must have a viable business or business plan
  • The trustee must know how the borrower will use the loan and understand how it will impact the business
  • The borrower will be required to invite a number of lenders from their own network to fund their loan
  • The loan must be seen to have a positive social impact
  • The borrower must be over 18

In Kenya, the borrower selection criteria are as follows:

  • The trustee must DEEPLY TRUST the character of the borrower they are endorsing and his or her commitment to repay the loan
  • The borrower must have a viable business or business plan
  • The trustee must know how the borrower will use the loan and understand how it will impact the business
  • The loan must be seen to have a positive social impact

What due diligence does Kiva Zip do on borrowers?

Over the last two years, Kiva Zip has developed increasingly robust due diligence checklists for borrowers in both Kenya and the United States. These checklists include verifying the identity of Kenyan borrowers using M-PESA or U.S. borrowers using a third party platform called EarlyIQ; conducting online research on borrowers and their businesses; connecting with borrowers on social media to establish the extent and strength of their networks; and verifying the information submitted in borrowers' application forms by examining their credit reports.

Our due diligence processes, both in the United States and Kenya, are being continuously improved and refined. We believe our risk management is stronger now than it was when we launched the Kiva Zip program.

Borrowers’ performance on their first loan affects their eligibility for additional loans of higher amounts.

Why does Kiva Zip require U.S. borrowers to invite their own lenders?

U.S. borrowers on Kiva Zip must invite lenders from their own network (and/or the network of their Trustee) to fund their loan, before they are able to take advantage of Kiva Zip’s crowd of lenders. We view this is an important measure of the borrower’s trust network and hope these lenders keep the borrower accountable for repaying their loan. For loans of $2,500 and under we require borrowers to invite 7 lenders from within their network. For loans of $2,525 and above we require borrowers to invite 15 lenders from within their network.

We ask U.S. borrowers to recruit lenders from their own networks for three principal reasons:

  1. Borrowers who invite their own networks on Kiva Zip have a significantly higher repayment rate on their loans
  2. We’ve found that loans fundraise much more quickly when the immediate network of the borrower is engaged in the fundraising period. When Kiva Zip lenders see that a borrower has some skin in the game, because they have invited their own friends and family to lend to them, they are more likely to make contributions of their own
  3. The health of the Kiva Zip program is dependent on new lenders that join Kiva Zip and support our borrowers. Inviting lenders fuels the growth of the Kiva Zip program, allowing us to support more entrepreneurs

What are the loan terms on Kiva Zip?

The maximum amount that Kiva Zip borrowers in the United States and Kenya can borrow can increase as borrowers repay.

In the United States, the amount that Kiva Zip borrowers can borrow is as follows:

Loan Maximum Loan Amount Loan Term
1 $5,000 6 - 24 months
2 $10,000 12 - 36 months
3 $15,000 18 - 48 months
4 $20,000 24 - 60 months

In Kenya, the amount that Kiva Zip borrowers can borrow is as follows:

Loan Maximum Loan Amount Loan Term
1 10,000 Kenyan shillings (KSh) 2 - 3 months
2 20,000 KSh 4 - 6 months
3 30,000 KSh 6 - 9 months
4 50,000 KSh 9 - 12 months
5 70,000 KSh 9 - 12 months

How can borrowers qualify for larger loans on Kiva Zip?

Borrowers must fulfill several criteria in order to qualify for larger loans on Kiva Zip:

  • Most importantly, borrowers must pay back their first loan on-time. Some leeway will be given for slightly late payments, but in order to qualify for a larger loan, the final loan repayment of the previous loan must be made on-time.
  • Borrowers must be in good standing with their trustee. Their trustee must write another endorsement for each subsequent loan application.
  • Borrowers must have made at least one comment updating their lenders on their progress.
  • Borrowers must complete a post-loan survey about their experience over the course of the loan.

How do borrowers use their loan?

Kiva Zip borrowers have used their loans for a wide range of different reasons.

Some examples from the United States include:

  • A $500 loan to pay for a stall at a trade fair for an artisan jewelry maker
  • A $1,700 loan to purchase new labels and three months of commercial kitchen fees for a pesto maker
  • A $2,000 loan to buy a new computer
  • A $2,500 loan to purchase key items in bulk for a pickling business
  • A $5,000 loan to purchase inventory, and a permit to accept food stamps at a corner store
  • A $5,000 loan to purchase a used van to cater bigger events for a baker

What interest rate does Kiva Zip charge?

Lenders receive 0% interest from the loans they make on Kiva Zip. Borrowers also pay 0% interest on their loans.

There may be some operational costs associated with sending and receiving payments. Kiva Zip aims to cover these costs during the alpha phase and will work to reduce such costs as much as possible.

How does the Kiva Zip Team handle delinquencies?

Loans are marked as delinquent when a borrower has paid back less money than owed to date, as indicated on the borrower’s repayment schedule. Only the borrower, the Trustee, and the lenders for a delinquent loan will know that it is delinquent. Loans are considered to be in default after 180 days has passed since a borrower has made a repayment. Once a loan is marked as defaulted, the borrower’s conversation tab will be closed.

When loans are delinquent, borrowers and Trustees are expected to provide frequent updates to lenders about their business and the context around the delinquency. While lenders are welcome to ask questions of borrowers and Trustees in any situation, lenders should take great care that no comment that they post could be deemed as threatening or abusive in any way. Any comments in violation of Kiva Zip’s Conversation’s Tab Guidelines will be removed.

The Kiva Zip team has internal processes for managing delinquent loans. We are continuously striving to develop, analyze, and improve these processes. For more information on our delinquency management protocols, please see this blog post (as of October 2013). The Kiva Zip team may post updates to lenders on borrowers’ conversations tabs from time to time, but due to resource constraints, we cannot commit to doing this regularly for every loan.

How do I apply for a Kiva Zip loan?

Prospective borrowers in Kenya or the United States can apply for a loan for their business by following this link and selecting "I want to be a Borrower".

After submitting your information, a member from the Kiva Zip team will reach out to you to invite you to fill out an online pre-screening survey about you and your business. Kiva Zip will determine if you qualify for the full loan application.

Note: Due to a large number of loan applications, and our small team, it can take us a long time to follow up with applicants.

Before you can access a loan on Kiva Zip, you will need to find a trustee to endorse you. Trustees can be either organizations or individuals.

The best trustees meet the following criteria:

  • They must know the borrower very well, ideally over a long period of time, and must TRUST THEM DEEPLY
  • They must know and understand the borrower's business
  • Borrowers must be comfortable sharing their personal financial information with their trustee -- for example, their household income and level of indebtedness
  • Individual trustees must have at least two years of experience in a relevant field -- for example, small business ownership, economic development, community development, etc.

Some examples of trustees include:

  • An organization that is providing, or has provided, assistance or support to the borrower's business
  • A person with at least two years of experience in small business development or technical assistance
  • A network or association of which the borrower is a member
  • The borrower's church or religious community
  • One of the borrower's major suppliers or customers with whom the borrower has had a long-standing business relationship
  • A close friend who is also a small business owner, and who understands the borrower's business situation well

How can I increase my fundraising speed?

The most powerful way that a borrower (or a trustee) can increase fundraising speed is by inviting their networks to become lenders.

For the time being, Kiva Zip will match any funds contributed by lenders invited by the borrower or trustee.

The Kiva Zip system is only able to match these funds invited lenders' loans, when it is able to determine that these lenders were invited by the borrower or the trustee. For this to happen, borrowers and trustees MUST invite their networks to lend to them in one of three ways:

  1. Use the "Share this link with your network!" provided in the “My Zip” section of the borrower or trustee’s Kiva Zip account.. If lenders come to Kiva Zip by clicking on this link, the Kiva Zip system assumes that they were invited by the borrower or trustee. This link can be posted in emails, Facebook, Twitter, etc.
  2. Invite friends and family to make loans to them by following this link. The invited lenders will get an email directing them to the relevant loan, and again, the Zip system will be able to track that they were invited by the borrower or trustee.
  3. Use the social media links along the top left side of the loan page. Users must be logged in for this social media sharing to be tracked and recognized.

Additionally, borrowers can attempt increase their fundraising speeds by doing the following:

  1. Post a high quality profile with a good photo. The best photos are ones that clearly and colorfully show the borrower's face (ideally smiling!) and show the borrower doing something related to his or her business.
  2. Post comments and updates in the Conversations tab. This will help to earn connectedness badges, which will help them to appear responsive and communicative to lenders.

If you are a trustee, having a proven repayment history of other endorsed borrowers shows lenders that you choose good borrowers. Lenders can sort by repayment rate when looking for credible trustees and borrowers.

What guidelines are there for borrowers’ loan photos?

In the United States, the loan photo must meet the following criteria:

  • The borrower must be in the photo
  • The borrower’s face must be clearly visible
  • The borrower must not be wearing sunglasses
  • The borrower must be at their place of business, or doing something related to their business
  • The photo can not be a collage of different photos stitched together
  • The photo can not be a passport photo or “mugshot”
  • The photo orientation must be landscape, not portrait

As well as meeting all of these criteria, the best U.S. photos are colorful and well-lit, and feature smiling borrowers.

For some examples of great U.S. photos, please see this slideshow.

In Kenya, the only criteria is that the borrower must be in the photo.

The best Kenyan photos are colorful and well-lit, and feature smiling borrowers. Borrowers are at their place of business, or doing something related to their business.

For some examples of great Kenyan photos, please see this slideshow.

How long do I have to fundraise on Kiva Zip?

When a loan is posted into the private loan period, the borrower has 15 days to invite the required number of lenders to fund their loan. For loans of $2,500 and under, borrowers must invite seven lenders, for loans of $2,525 and above, borrowers must invite fifteen lenders. Once a borrower reaches the required number of lenders, their loan will be posted to the public Kiva Zip website and have 45 additional days to raise the remaining amount.

What happens if a Kiva Zip loan is not funded?

If a Kiva Zip loan has not been fully funded after 45 days of public fundraising, it will expire. The loan is removed from the website, any lenders that funded it are refunded their money, and the borrower will receive none of the money.

Can a borrower fund themselves on Kiva Zip?

No, a borrower can not fund themselves on Kiva Zip. In the event of a borrower funding themselves, the share purchase will be refunded, and further, more severe steps might also be taken, depending on the circumstances.

Can I apply for another loan if my first loan request does not reach its fundraising goal?

If a borrower applies for a loan that expires, they are eligible to reapply subject to two conditions:

  1. The borrower must wait six months before restarting the application process for another loan.
  2. The borrower’s first loan application must have reached 50% of its goal.

For this reason, we encourage borrowers to either:

  1. Apply for a smaller loan when they first apply for a Kiva Zip loan. As well as the borrower needing to raise a smaller amount to reach their goal, we have also found that smaller loans are more popular with Kiva Zip lenders. Furthermore, lower monthly payments reduces the risk of repayment challenges.
  2. Aggressively promote their loan to their own networks, to ensure that the loan does not expire. Not only do the contributions of the borrower’s friends and family help to achieve the fundraising goal, but we have also seen that they encourage other lenders to fund the loan, presumably because they see that the borrower has some more skin in the game.

If a borrower reapplies for a loan after their first one expires, the amount of the second loan must be less than or equal to the amount of the first loan.

If borrowers submit two loan applications, and they both expire, they are not allowed to re-submit a third application.

What are group loans?

Group loans provide a way for borrowers to operate as a single unit and reduce risk to lenders.

  • Unlike Group Loans on Kiva's main site, Zip group loans are posted as separate loan profiles rather than bundled as one single loan profile.
  • All loans must fully fundraise or all will be refunded to lenders even if other loans were fully funded.
  • Borrowers will not be able to graduate to the next level of loan amount unless all group members pay back successfully.
  • If a loan that is part of a group defaults, other members of the group can optionally pay the remaining balance so that they can graduate to the next level.
  • All loans in a group will have the same terms (grace period, length and repayment frequency).

Will Kiva ever contact me about applying for a Kiva Zip loan?

Kiva employees or volunteers may reach out to you about applying for a Kiva Zip loan; however, if you do receive such an email, you should be initially cautious. We have heard of scammers sending fake emails claiming to be from Kiva in an attempt to get people’s personal and financial information. Kiva will never ask for your passwords or bank account information, and we'll never charge you a fee for a Kiva Zip loan. If you receive an email that you’re not sure is from Kiva, please forward it to contactus@kiva.org for verification. You can also check out the following blog post on phishing scams for more information on how to protect yourself:
http://blog.kiva.org/2013/10/01/a-note-about-kiva-and-phishing-for-national-cyber-security-awareness-month

What resources can Kiva Zip borrowers take advantage of?

FundWell

FundWell provides small businesses with up to three lender referrals for free. We explain the pros and cons of each loan type, and how we determined your eligibility. Additionally, we can provide loan application assistance to help you get approved quickly at the best rate possible.

They now offer Kiva Zip borrowers the opportunity to sign up on their platform and learn about other financing resources that you can take advantage of.

If you are interested in the FundWell program you can visit their website or contact Chinwe Onyeagoro at chinwe@thefundwell.com.

Pacific Community Advisors

Pacific Community Ventures creates jobs and economic opportunity in low-income communities through the direct support of small businesses as well as by advocating for systemic change to increase investment in these vulnerable communities.

They are offering Kiva Zip borrowers five hours / month of free expert business advice to help you grow your small business.

If you are interested in PCV Online Business Advising you can visit their website or contact Jillian Galbete directly at jmgalbete@pcvmail.org for more information.

MicroMentor

MicroMentor is a completely free, non-profit network that connects entrepreneurs with volunteer business mentors. They help entrepreneurs start, run and grow their business from an experienced business mentor.

They are offering Kiva Zip borrowers the opportunity to take part in their mentorship platform for free.

If you are interested in the MicroMentor program you can visit their website or contact Loren Guerriero at loren@micromentor.org.

Small Business Development Centers

Small Business Development Centers (SBDC’s) provide a vast array of technical assistance to small businesses and aspiring entrepreneurs. By supporting business growth, sustainability and enhancing the creation of new business entities, SBDC’s foster local and regional economic development through job creation and retention.

There are over 900 Small Business Development Centers around the country and you can find the location nearest to you by visiting their website.

SCORE Advisors

SCORE is a nonprofit association dedicated to helping small businesses get off the ground, grow and achieve their goals through education and mentorship. SCORE is supported by the U.S. Small Business Administration (SBA), and has a network of 11,000+ volunteers.

SCORE offers free services to entrepreneurs across the United States. To find your local SCORE chapter you can visit their website.

Questions For and About Kiva Zip Trustees

What is a trustee?

A trustee plays a crucial role in the Kiva Zip system and is responsible for both recommending borrowers for a Kiva Zip loan and ensuring that they meet the criteria outlined above.

Trustees provide borrowers with ongoing support throughout the term of the loan. This could include providing internet access and business coaching, encouraging borrowers to communicate with their lenders and make partial payments in the event of delinquency, and more.

A Kiva Zip trustee can be an organization or an individual.

What are the qualifications to become a trustee?

Trustees should have compelling answers to the following questions, which appear on their public profile:

  • How will you determine whether or not the business plans of the Borrower(s) you endorse are sound?
  • How will you know whether the Borrower(s) you endorse will have the "character" to repay a loan?
  • Please describe what type of business, financial, technical or other support you plan on providing to the Borrower(s) you endorse.
  • How will you establish whether the Borrower(s) you endorse are in debt, or have a history of debt? How will what you find affect your endorsement of their loan application?
  • Why can't the Borrower(s) you endorse access traditional loans?

Individual trustees must have at least two years of experience in a relevant field -- for example, small business ownership, economic development, community development, etc.

Within that scope, anyone (an individual or an organization) can become a trustee, so long as they can provide strong answers to these questions.

How does Kiva Zip screen trustees?

The Kiva Zip team employs a due diligence checklist for every trustee that we onboard, including (amongst other things) online and social media research, reference checks, security checks, etc.

We speak with every trustee as part of the onboarding process. We explain to them their roles and responsibilities and listen to why they are interested in becoming a trustee and why they feel they are qualified to play the role.

Every trustee must fill in an online application form, part of which becomes a public-facing trustee profile page. We review every trustee's application, following up where appropriate.

Trustees’ performance on the Kiva Zip site affects their ability to endorse additional borrowers. Trustees that endorse borrowers who do not repay their loans will be prevented from making future endorsements.

What financial involvement do trustees have in the loan?

A trustee does not handle any Kiva Zip loans and does not guarantee loan repayment. Trustees have no fiduciary duty to Kiva, borrowers, or lenders, including repayment of a loan on behalf of a borrower.

Kiva Zip trustees never handle the money associated with the loan – loans are sent directly from Kiva Zip to the borrowers, once fully funded by the lenders.

Trustees will also not receive any interest rate or flat fee (e.g. servicing fee, referral fee, access fee, etc.) related to the loan.

How many loans can trustees endorse? What are Trustees' credit limits?

Trustees are categorized by a tiered structure that determines the number of endorsements they can make and what loan sizes they can endorse.

Trustees are assessed then upgraded or downgraded on the first of every month.

Underperforming trustees will be "closed" and unable to endorse future Kiva Zip borrowers.

For trustees in the U.S., the requirements to reach each Tier and the associated credit limits are set out below:

Tier Requirements Endorsements Allowed Max 1st Loan Size
Pilot Approved Trustee application, >50% repayment rate 3 $5,000
1 10 repayments made, >80% repayment rate 10 $5,000
2 25 repayments made, >85% repayment rate 20 $10,000
3 50 repayments made, >90% repayment rate 30 $10,000

For trustees in Kenya, the requirements to reach each Tier and the associated credit limits are set out below:

Tier Requirements Endorsements Allowed Max 1st Loan Size
Pilot Approved Trustee application, >50% repayment rate 10 10,000 KSh
1 10 loans fully repaid, >80% repayment rate 20 10,000 KSh
2 20 loans fully repaid, >85% repayment rate 30 20,000 KSh
3 30 loans fully repaid, >90% repayment rate 50 30,000 KSh

What happens to the trustee if a borrower he/she endorsed doesn't pay back a loan?

The trustee will face no financial penalty in the event that a borrower defaults on a loan. Having said that, it clearly will reflect poorly on their reputation if one of their borrowers defaults. Over time, we will stop working with trustees who endorse borrowers that do not repay their loans.

How do I apply to be a trustee?

Prospective trustees in Kenya or the United States can apply to be a trustee by following this link and selecting "I want to be a Trustee".

After submitting your information, a member from the Kiva Zip team will reach out to you to invite you to fill out an online pre-screening survey. Kiva Zip will determine if you qualify for the full trustee application.

Note: Due to a large number of trustee applications, and our small team, it can take us a long time to follow up with applicants.

Questions Relating to Kiva

What is Kiva?

Kiva is a non-profit organization with a mission to connect people through lending to alleviate poverty. Leveraging the internet and a worldwide network of microfinance institutions, Kiva lets individuals lend as little as $5 to help create opportunity around the world. Find out more at www.kiva.org.

What is microfinance?

Please click the following link for more information on microfinance: http://www.kiva.org/about/microfinance.

How does Kiva Zip differ from Kiva?

Kiva Zip is a small project, launched by Kiva, to test a more direct lending model than that currently used by Kiva.org. In its Alpha testing stage, Kiva Zip will operate separately from www.kiva.org.

The principal difference between the two models is that the Kiva Zip model involves payments from Kiva Zip directly to Borrowers, whereas in the main Kiva model, these payments are routed via Kiva’s field partners. Kiva Zip still partners with organizations that work closely with borrowers (these are called “trustees” in the Kiva Zip model), but these organizations never handle the loans.

Another differentiating factor of Kiva Zip is the target borrower populations. Kiva Zip is intent on expanding financial access to borrowers who could not otherwise receive a loan from a traditional bank or microfinance institution (MFI). This means that the borrowers on Kiva Zip may be different than those on the main Kiva website. For example, in the United States it is becoming apparent that a lot of start-up businesses currently lack access to capital, and that these are prime candidates for Kiva Zip loans, whereas most of the United States businesses on Kiva.org are already established.

At least for the foreseeable future, Kiva Zip borrowers will be paying 0% interest rates. By contrast, in the main Kiva model, most Borrowers do pay interest rates to the field partners in exchange for administration of the loans and a whole host of other services (ie, technical assistance, financial advice, etc.).

One innovation of the Kiva Zip model that we're really excited about is the Conversations feature. Through the Conversations tab on a borrower's loan page, borrowers, lenders and trustees are able to communicate directly with each other. We've seen lenders become business advisers, brand ambassadors and customers of the borrowers to whom they have lent money. They also use the space to send messages of support and encouragement. We hope that Kiva Zip can more fully realize the part of Kiva's mission that talks about connecting people through lending, and we believe that the Conversations feature is a significant step towards the fulfilment of that promise.

Another important difference is that Kiva Zip loans are riskier than loans in the main Kiva model. Kiva.org has been operating for over 8 years now, and many of the kinks and loopholes in the model have been fixed over time. Because the Kiva Zip model is new, it is likely that there will be some growing pains over its first couple of years. For example, the default rate on Kiva Zip is expected to be significantly higher than the 1-2% seen on Kiva.org today, as due diligence methodologies on both trustees and borrowers are improved.

In the main Kiva.org model, most of the exchange rate risk is borne by Kiva.org’s field partners; however, in the Kiva Zip model, the lenders take on the foreign exchange rate risk (for more on this, please see the question: “What are the risks involved with lending on Kiva Zip?”).

There will hopefully be a number of small experiments on the Kiva Zip website, which will differ from the main Kiva website. Examples include modifying the borrower profile, changing loan sizes, and allowing borrowers to comment on and update their loan directly. It is hoped that some of these experiments will be successful, and subsequently exported to the main Kiva website.

Why did Kiva launch Kiva Zip?

Kiva’s mission is to connect people through lending to alleviate poverty, empowering individuals to create opportunity for themselves and others through safe, affordable access to capital. To that end, Kiva has been discussing and debating different direct lending models since its founding, to enhance the relationship between the lender and the borrower, and to expand access to capital to a wider population.

Since the beginning, Kiva has been determined to remain on the forefront of technological and financial innovation in the social sector. Now that Kiva is a more mature organization, the Kiva management team feels Kiva has the resources and the talent required to start testing these ambitious ideas, to rapidly pilot and deploy (or reject) new projects. Kiva Zip is one instance of this entrepreneurial approach.

How will the project interact with Kiva.org?

The Kiva Zip sub-domain is separate from Kiva.org. Assuming the Kiva Zip project continues to go well, the long-term plan is to integrate Kiva Zip into the main www.kiva.org website.

Innovations in person-to-person lending © 2005 - 2012 Kiva. All rights reserved. Kiva is a U.S. 501(c)3 non-profit organization.