Zafen on Kiva: When Crowdfunding Meets Microfinance

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In my article What is Social Finance, I mentioned microcredit, as a way to reduce poverty by providing accessible loans to low-income populations having little or no access to traditional banking systems. Also, in 6 Ways To Finance Your Startup, I also introduced crowdfunding, and different sites that can help you raise funds.  Now when these two concepts are combined, you get platforms like Kiva, a non-profit organization that connects people around the world through microlending; and Zafen, a crowd-funded loan source focused on Haitian small growing businesses that do not qualify for traditional bank loans or microfinance. The two organizations recently partnered up, in order to expand financing opportunities to Haitian businesses that have little access to capital. This project aims to stimulate developing economies and foster social development.

How to contribute on Zafen

  1. Go on Zafen.org, and set up an account in the MY ZAFEN section. You can then customize your profile by including a picture and personal information.
  2. Click on the PROJECTS section. You can filter projects by type of enterprise, funding priority, amount requested or days remaining.
  3. Once you have selected a project, you can read a detailed summary about it.
  4. Select a contribution between US$25 and US$900 then add to cart. You will be prompted to log in or sign up.

Zafen’s platform is structured a bit like an e-commerce site, where you ‘shop for’ interesting projects to fund, and once you are ready to donate; you go through a checkout process. Payments are only accepted through Paypal. Zafen also provides the option to lend, but donations still represent the main way to contribute.

How to contribute on Kiva

  1. Go on Kiva.org, click on LEND, where you can choose a borrower. On each borrower page, you have access to a detailed summary of the project, and some country statistics like the annual average income and the total amount raised on Kiva. Like on Zafen, you can also see who else has contributed, and even check their profile to see in whic other projects they have contributed. As most crowdfunding platforms, you can see the achievement level in percentage (i.e. amount raised so far/total amount required). Finally, you can also filter your search by borrowers’ attributes like gender, sector, groups vs individuals and project type.
  2. Select an amount between US$25 and US$500 then click on ‘Lend’.
  3. When you’re done ‘shopping’, you can checkout your cart. You will be prompted to log in or sign up.  All payments are managed through Paypal (this includes credit card payments).
  4. As the borrower repays the loan, the money becomes available in your account. This is called your Kiva Credit.

The interest rate charged on the loan generally appears in the summary. You also have access to financial information like the term, the repayment schedule, the currency exchange loss rate, the field partner risk rating, its portfolio yield, its return on assets, the delinquency and default rate. Make sure you carefully read how Kiva works.

You can follow the conversation on Twitter by following the hash tag #zafenonkiva

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