Microlending helps small enterepreneurs start businesses - Essay Example

Microlending Question The success of any given business is greatly influenced by the level ofinvestment made in the business. While influential factors in business are many in number, the financial aspect is critical. Small, medium, and large businesses have to account for the financial factor for continued and progressive business operations. Small entrepreneurs often face financial challenges in starting and running their businesses, but microlending has come to their aid. Kiva.org, for example, has successfully helped many entrepreneurs across the globe. The success that Kiva.org has realized in its operations is drawn from its organization and ability to mobilize funds from lenders. There are collaborative efforts between Kiva, lenders, entrepreneurs, and other players in the microfinance sector. This diversifies its reach to the global population, allowing web-based donations to be mobilized for loaning purposes.
Question 2
The organization of Kiva.org is unique relative to the financial purposes it serves. The microfinance combines a traditional business system with a contemporary web platform in executing its operations. The ultimate objective is to reach out to the needy entrepreneurial population and help it eradicate poverty in both the short run and long run. Kiva.org uses other microfinance players to reach out to the globe. Being a web-based microfinance, it does not necessarily need physical locations to attend to entrepreneurs. Also, working with other global microfinances further makes Kiva.org unique.
Most importantly, the microfinance does not operate on a return-on-investment basis. Lenders actually donate the loan funds without expecting any returns on the loans that Kiva gives to needy entrepreneurs. The loans given by Kiva.org to entrepreneurs come from donations that are received from the lenders through the website. This essentially deviates from traditional businesses where loan funds are obtained from deposit-taking activities. On the same note, Kiva.org depends on field partners to have entrepreneurs’ profiles approved in order to qualify them for microfinance lending.
Question 3
The model Kiva.org uses to give loans is effective and efficient. As the situation stands, this microfinance has reached millions of entrepreneurs in need of loans. Follow-ups are also made to not only ensure that the awarded loans are put to use, but also repayments are collected when they fall due. While this model appears simple, it is actually sophisticated and functional. Personally, I think that this model would work on a larger scale.
The ultimate concern is not the amount of money being dealt with, but the actual objective and goal being pursued. Kiva.org has proven its point globally. Working on a larger scale and handling larger loans does not pose any operational challenges to Kiva. All that would need to be done is improving the capacity and mobilizing more funds to accommodate the required increase in loans. This can even extend to businesses of other kinds, but Kiva.org should remain committed to its parent goal of helping small entrepreneurs and eradicating long-term poverty. Read More