Kiva.org - My MicroEntrepreneurs Paid Off the Loan… No Surprise

My portfolio of micro-entrepreneurs came through again. I had two entrepreneurs just repay my loan. I’ll need to look for some other people to loan to on Kiva.org.

It is one thing to read about 97% or 99% payback rates in articles. It is another thing to witness firsthand that 100% of your borrowers have paid back every single payment, week after week after week. Personally experiencing repayment makes you feel part of the “success” as that person’s business must be doing well to repay the loan. And now, you have money to loan the next person.

Microfinance has a supportive culture where borrowers encourage each other to overcome sickness and setbacks. This mutual support and positive “peer pressure” achieves very high payback rates.

As Nobel Prize Winner, Muhammad Yunus, noted, there is a sub-prime crisis in the US, but micro-entrepreneurs are faithfully making their repayments at about 99%. That default rate of about 1% or less, contrasts sharply with the US mortgage default rates of 2.7% for prime, 5%+ for alt-A and 16%+ for sub-prime.