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Sam Hocking
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Sam commented on the article |Leigh,
Thank you for this wonderful review of Kiva's new domestic microlending program. I work at ACCION USA, one of the two Kiva field partners operating in the States, and it's exciting to hear so much discussion about US microloans. AUSA believes passionately in the value of small business and accessible credit, having offered domestic microloans now for over a decade. With the ability to enrich communities, empower individuals, and increase economic opportunities, small business constitutes a vital sector of our economy.
By permitting loans to US microentrepreneurs, Kiva has allowed AUSA to provide access to credit to many individuals who would have otherwise been without financial resources. As Kiva wisely acknowledges, poverty is relative, and income deprivation is only one component. As you state, credit has always been scarce for small business owners, but in the heat of the financial crisis, it has all but evaporated. Compounding this, many of our borrowers have suffered from medical debt or labored in a difficult job with little potential for advancement. The chance to own a prosperous small business is a massive opportunity for them.
Yet this still begs the question of whether microfinance truly helps alleviate poverty. As I'm sure you're aware, a number of recent studies examining microfinance overseas have concluded that, at least in the short term, microfinance has limited impact on the recipients' incomes. However, AUSA's own data make the case for quite a different conclusion. Our studies show that not only do borrowers tend to report an increase in household income, but our loans help create jobs-a substantial spillover benefit for the community. Furthermore, as you state, the sense of reciprocity generated by a Kiva loan should not be ignored. It seems highly plausible to me that once an entrepreneur has benefited from a loan, as an expression of their gratitude, they would likely begin lending through Kiva themselves!
If you're curious about the specifics of Kiva's domestic lending program, please visit their blog. To learn more about ACCION USA's operations, check out our online resources documenting the impact of our loans. Also please feel free to follow our blog and our twitter account (@ACCION_USA)!
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Sam commented on the article |Nathaniel,
Thanks for the article! Working for ACCION USA, it's been exciting hearing all the discussion occurring over domestic microfinance. I love that you highlight less tangible impacts of our partnership with Kiva. We certainly hope to open major avenues to credit for small businesses all across the country. But beyond that, Kiva and AUSA also want to make a statement that we are committed to addressing poverty wherever it exists; that need is need and it cannot be neglected. Kiva recently authored an incredible write-up on their blog, elaborating on this idea and summarizing their findings from the domestic loan test period.
And a credit gap absolutely exists in the US! The only type of financing available for microenterprises is credit cards, which charge high interest rates, often damage credit scores, and harshly penalize for late payments. At ACCION USA, business owners frequently call asking for a debt consolidation loan because they have become so mired in credit card debt. Clearly, credit cards are superior to no financing at all or to the loan sharks that so often dominate markets overseas. However, to deny that a credit gap exists discounts the reality confronted by small business owners.
For anyone looking for a microloan, please visit ACCION USA's website where you can apply online and access our wealth of financial education resources. To continue this discussion, don't hesitate to email me at hocking at bc dot edu. And if you're interested in learning more about AUSA please feel free to visit our blog and begin following us on twitter (@ACCION_USA)!
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