First things first. My blog is not a “deals” or “MS” blog. Sure, I touch on them now and then and especially so on the 1st of January each year post but beyond that I focus on Delta Air Lines most of the time. When the two mix I tend to cover that as well.
Also, for those who do not know, KIVA is a “micro” lending organization. You can read all about what they do on their site and even join the team I am part of from Boarding Area – that is, the partner Inside Flyer team. This is not an affiliate link just a bragging rights to show off how many loans the team does. For me, while I like doing good, it is about earning points as loans to KIVA can be funded with a credit card at no fee to you. Then, you just hope, all your money is paid back over time. You do not earn interest you just hope to get your loaned funds back over time. The reward is feeling good and earning some points along the way (and maybe meeting some spend on your travel cards along the way).
On to today’s quick post about KIVA and how I do it. This is not meant to be a definitive guide by any means and friends of mine like Greg, The Frequent Miler is a better source to follow when it comes to in-depth learning all about how to go deep into KIVA with auto buying scripts and the like. Great for those into this but not for me. But what I do works well for me personally and I have had a number of readers ask for a post describing what I do so here it is in a nutshell.
I have put up a photo to make it simple and you can save that as a cheat sheet. Again, please understand I am guaranteeing nothing by following this advice just sharing that this has worked for me for years and I still have ZERO losses across the board with my KIVA loans (however I often have slow pay but that is fine with me). KIVA even clearly warns you that “Lending through Kiva involves risk of principal loss. Kiva does not guarantee repayment nor do we offer a financial return on your loan.” With that warning in mind, here are the things I focus on:
- Mostly to S. America and Asia
- 99% to groups
- Short term loans under 1 year
- A risk rating of max 4
- Solid partner ratings
- A less that 5% default rate
- $500 per loan if possible
So this is the quick cheat sheet that has worked for me. Let me begin by saying that you should not read anything into where I choose to lend as a judgment of any kinds of people. My goal is helping, yes, but also getting my money back. That impacts where I choose to lend. Clear?
Next, I choose groups. Why? I have found groups will tend to pressure each other to complete the loans. Not saying individuals don’t do the same but I like groups.
Next I like short term loans. If I can find 6-8 month loans that is amazing. If not, then under 12 months works for me too if I am not finding too many in the shorter time range during my lending cycle.
I want low risk loans from solid field partners. While I am not overly concerned about currency swings (have never had an issue so far) the main risk to me is a loan going bad. I think going for 4-5 risk rated loans helps reduce this chance
In the same thought process as the above I want a low chance for a default. I really don’t mind if the borrower is delinquent a bit as they tend to catch up. If it takes a month or two longer to get paid – so what. I am just fine with that.
Finally I am lending a few thousand almost every month so I want make this quick and get my loans done and move on with my life so I tend to pick loans that I can fund $500 at a time and say lend $1-3k per attempt.
So there you are, it really is that simple. Other bits to keep in mind. I do not give “extra” when I lend. Maybe I should give a few bucks but I feel my large funding is helping enough. Next, I sweep my funds once a month out of KIVA as these loans start paying back almost right away (i.e. inside 30 days) and when you have enough of these “in the pipeline” every month there are funds coming in. I take them out and do my new loans again funded from whatever travel card I want to use.
Again, I am no expect on KIVA. This is what I do and it does what I need. Have any questions on this let me know and I will do my best to answer or help out! – René