Mike Messina, who began lending to Third World entrepreneurs 10 months ago through Kiva.org, has
more than $2,000 in loans outstanding to four dozen small businesses around the world. Photo by Duane Tinkey
Mike Messina, who began lending to Third World entrepreneurs 10 months ago through Kiva.org, has more than $2,000 in loans outstanding to four dozen small businesses around the world. Photo by Duane Tinkey


Mike Messina isn't an international banker, and he's certainly no Bill Gates, but that hasn't stopped him from financing small businesses on a global scale.

In less than a year, Messina has loaned more than $2,000 of his savings, mostly $25 at a time, to 48 small businesses in two dozen countries through Kiva.org, a Web-based micro-lending organization. In that time, more than $800 in principal repayments have flowed back to his Kiva account, which allowed him to provide loans to additional businesses.

"It kind of reminds me about (New York Times columnist Thomas L.) Friedman's book 'The World Is Flat,'" said Messina, 63, who works as a paralegal for a federal judge in Des Moines. "Through your computer, you can really reach around the world and loan money to someone who's going to do it to improve their life, and then they repay the money. It's the old line if you give a guy a fish, he's going to eat for the day, but if you give him a fishing pole and a net, he can feed himself."

One of Messina's first loans, coincidentally, helped finance a Samoan fisherwoman who needed funds to buy more nets as well as baskets to carry her catch to the local market. Other loans have helped a Lebanese man start a barber shop in Afghanistan; enabled an electrician in Uganda to expand his shop; and financed the efforts of a cooperative of women in Peru to launch dress shops and neighborhood grocery stores and to raise small animals such as sheep and goats for market.

A California couple, Matt and Jessica Flannery, founded Kiva in 2005 with the idea of connecting individuals willing to lend their own money to entrepreneurs in developing countries who needed small loans to expand their businesses. In just over two years, the micro-lending organization has built a portfolio of more than $19 million in loans to nearly 30,000 small businesses in 39 countries.

The organization to date boasts a cumulative repayment rate of 99.8 percent.

The borrowers aren't the only ones who are international. Kiva has active lenders in about 50 countries, which means Messina and other U.S. lenders are often joining their efforts with those of people from many nations.

"That's another thing I enjoy about this," Messina said. "When you make a loan, you can see who else has loaned to this business. It's not just people from all over the United States; it's people from Germany, Japan, just about any country."

Messina is among just 29 people who have registered as Kiva lenders in Iowa, though Kiva officials say it's likely there are more who aren't identified, because lenders aren't required to provide information about where they live.

'We're all equal'

John Christopher, 44, a self-employed information technology consultant from Newton, learned about Kiva through an article in The Economist magazine. He has made loans to 14 businesses in six countries since joining Kiva in July 2006.

"I just like the idea that we're all equal, no matter where you're at," he said. "This is a way to give them the benefits of the capitalistic system we have. And this will mean a long-term improvement to their lifestyle, because it improves their ability to earn a living."

Though he declined to say how much he and his family have loaned, Christopher said it is much more than the average Kiva lender, which is about $86.

"I just feel that we're more connected if we're giving a large chunk of a person's loan, and we're more vested in their success as well," he said. "But we're not doing anything too crazy. We've said, this is how much we're going to (loan), and when they repay it, we just turn it around and loan it to someone else."

Christopher said he tries to get his family involved in choosing the businesses to support.

"I started looking at South and Central America because they're close to us, and Africa, because I think it seems to have the biggest need," he said. "I just try to find a variety of things, things that just look like a good business idea. The last loan I made, some guy in Africa was going to do a delivery business with a motorcycle. That made sense; it seemed like something a guy could make money at."

Students from at least one Iowa school have become micro-lenders through Kiva as well. Catherine Mein, a social studies teacher at Ballard Junior-Senior High School in Huxley, learned about Kiva through an article in Smithsonian magazine.

"I actually just gave the magazine to the leader of (the student council service committee), and she got really excited about it," Mein said. Made up of about 16 students, the student council decided to lend $25 each to three borrowers.

At first, the students printed out profiles of the potential borrowers to discuss them, Mein said. However, "they found that borrowers were being funded so quickly that they just went online and (viewed it using a projector) and everybody took a look at different people and decided that way."

It's likely the project will expand to the rest of the school as it's offered to other teachers, she said. "It's great; I like the idea of micro-lending, and it's also introducing them to people in other countries and offering them some assistance."

Each time a Kiva borrower makes a payment, the lenders with a stake in the business receive an e-mailed update with the percentage repaid. The lenders receive their principal back after the loan is fully repaid.

The interest charged by the participating "field partner" banks that actually extend the loans, which can be 15 to 20 percent or more, is kept by those field partners to operate their organizations. The transfers are made through PayPal, which waives its fees on the transactions as its contribution to the organization.

Presently, the supply of loans is actually outpacing the demand from potential borrowers, said Fiona Ramsey, a Kiva spokeswoman. For that reason, Kiva has temporarily capped the amount any one lender can extend at one time to $25.

"People have wanted to do something like this for so long," she said. "There's such an excitement from the lenders, and (they really like) the idea that you can loan the money again and again. They get so excited about it that they tell people about it. It's a real credit to the lenders; they're the ones who are putting this forward."

Last month, Kiva picked up 49,000 new lenders, including about 4,000 who signed up on Christmas Day, Ramsey said. Lending in January should get a bump from gift-certificate sales. "On Christmas Eve, we sold $259,000 in gift certificates; that must have been a lot of last-minute shoppers," she said.

Messina, who said he has bought gift certificates for friends, also makes the optional 10 percent donation to Kiva each time he makes a loan.

"I'm sold on it," Messina said. "It's something I want to do and encourage other people to do. Just from a selfish point of view, one of the things (Thomas Friedman) points out in his book: Wherever there are golden arches (McDonald's), you don't find a lot of aggression. It shows that people are interested in doing business, and when they are, they're not interested in going to war."

Correction:An earlier version of this story should have stated that the interest charged by field partner banks is kept by the field partners to operate their organizations, not by Kiva. Kiva receives its operating funds primarily from donations by lenders, and to a lesser extent from grants and donations from foundations.