Towards the end of last year, Kiva decided to allow partners to post loans for groups of borrowers in addition to individual borrowers. The main reason we decided to move forward with this is that it represents a truer picture of what’s happening on the ground since many borrowers actually borrow in groups. It also allows our microfinance field partners to more efficiently seek funding for larger numbers of entrepreneurs – before, they would be supporting groups of borrowers but would have to enter them one by one into the Kiva system.
That said, we didn’t do a great job of explaining group loans on our site. So, we’re trying to fix that. We’ve added a little blurb to explain group loans to every group loan profile. We’ve also added a couple new FAQs explaining why some partners choose to post group loans and how they actually work (posted here). In addition, we’re constantly working with our partners to improve the descriptions of these loans so that lenders get a sense of the stories behind them while still keeping this an efficient means of posting.
If you’re interested in learning more about the roots of group loans and why they work, I’d also suggest reading Banker to the Poor by Muhammed Yunus. It’s a quick read and offers a great explanation about these types of loans.