Each day, our world is more and more connected through technology. This connection provides an opportunity to improve lives around the world. For Julia Kurnia, the founder of Zidisha, this meant finding a way to distribute microloans to small business owners and entrepreneurs in developing countries.

What is Microfinance?

Microfinance is a general term to describe financial services to low-income individuals or to those who do not have access to typical banking services. These financial services usually involve small amounts of money, so the term “microfinance” helps to differentiate these services from those which formal banks provide.

Often, these small loans are distributed through Micro Finance Institutions (also known as MFIs), which range from small non-profit organizations to large commercial banks. These MFIs often charge interest on these loans, usually to cover overhead costs. Unfortunately, these rates take a big toll on the borrower’s profits.

Zidisha’s History

Julia saw this first hand during graduate school while she was working with a microfinance organization in Senegal. They raised hundreds of loans at zero cost through Kiva, an online microlending platform. As excited as they were about the loans, they were soon disheartened when they discovered how expensive it was manage them. Just traveling the long distances to visit borrowers was expensive enough, and hiring someone to manage the loans put their costs through the roof. The interest rates they needed to charge the borrowers defeated the purpose of the loans.

Julia decided to find a way to distribute loans without having to charge high interest rates. Thus Zidisha was born. Zidisha is a platform for direct person to person lending. As more and more people living in developing countries were gaining access to the internet, these direct loans made sense because borrowers and lenders didn’t need to visit a bank or travel a great distance, they only needed to log onto their computer.


How does it work?

The process is fairly simple. Entrepreneurs and business owners apply for a loan through the Zidisha website. Once the loan is approved, anyone who has access to the internet can contribute any amount to the loan.

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After the loan has been fully funded, the borrower uses the loan to improve their business in some way, big or small. They can gradually repay the loan, and when the loan has been fully repaid, lenders can re-loan the money. This cycle allows borrowers to scale their business and lenders to contribute to as many businesses as they like.

The Importance of Microfinance

Microfinance goes deeper than just loaning money. It is the belief that people from low-income backgrounds can lift themselves out of poverty if they are given the resources to do so. When the average income of many people in developing countries is $1 or $2 a day, it’s extremely difficult to save.

Here is an example. A seamstress in Western Africa creates beautiful dresses that are in high demand. However, she sews all of her dresses by hand and usually cannot make more than 1 or 2 a week. She applies for a loan through Zidisha so that she can pay for a sewing machine. Her loan is funded and her productivity triples overnight. She can easily make between 3 and 6 dresses each week, and she finds that her profits also triple. She is easily able to repay her loan. She decides to apply for another loan, but this time it’s a little bit bigger. She purchases a second sewing machine and is able to hire her first employee to help her make even more dresses. Her third loan may help her hire a third employee and move into a real shop. This is the power of microfinance.

Julia has built an incredible organization built mostly on volunteers. These people truly believe in this work, and because Zidisha itself controls each individual loan disbursement and repayment collection via the internet, they do not need the management of an intermediary.

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How can you support Zidisha?

Giving Assistant is proud to have members donating their cash back to Zidisha. We recently sent Zidisha a donation check of $92,000 and knew we needed to highlight such an amazing organization.

If you’d like to donate some or all of your cash back earnings to Zidisha, head on over to your account settings where you can select Zidisha as your charity.

To learn more more about funding a loan to a small business owner or entrepreneur, visit Zidisha’s website.