Kiva is a nonprofit, personal micro-lending site that facilitates loans between lenders and low-income entrepreneurs in developing countries. Lenders can find the business and entrepreneur they want to lend to based on region, business type, risk level, etc. Each posted loan is accompanied with bios for the respective entrepreneur, details on the why and what the loan is going to be used for, total amount raised from other lenders, loan duration (usually 6-12 months) and loan default risk.

Taking small payments, usually $25, from a bunch of Kiva lenders raises the loans. Once a loan’s full amount has been raised it is transferred using PayPal to one of Kiva’s field partners. Field partners are local microfinance institutions (MFIs) in developing countries that find, track and manage entrepreneurs and then disburse and collect the microloans. When loans have been repaid in full they are transferred back to Kiva and then to Kiva lenders via PayPal.

PayPal has allowed Kiva to transfer loans back-and-forth from the MFIs without transaction fees partly because of Kiva’s nonprofit nature and partly because of Kiva president Premal Shah’s past job of being a Principal Product Manager at PayPal.

Kiva is alone in their business model of online p2p lending to entrepreneurs in developing countries as a nonprofit entity. Other p2p lending sites, like Prosper, Zopa and Lending Club, make lower-risk loans to people in the same country as for-profit entities. Online p2p lending is new and it is hard to maneuver around financial regulations to make higher-risk, international loans as a for-profit entity, which is partly why Kiva formed as a non-profit.