Step 1: Review application from potential Field Partner

An organization that seeks to partner with Kiva must first submit an application, which consists of the following:

Detailed information about the organization, including its mission and history, products and services, governance and management, and technical and operational infrastructure.

Specific proposal for using Kiva’s capital to fund loans with high social or environmental impact.

Supporting documentation, including financial statements, portfolio reports, strategic plans, financial projections, ratings, and impact studies.

To be considered for a higher credit tier, an organization must submit additional documentation, which may include the following, depending on tier: CVs and/or bios of board and management members, organizational manuals, longer-range projections and budgets, and external references.

A Kiva analyst reviews these materials and then follows up with the organization to resolve any outstanding questions and discuss details of the potential partnership.

Step 2: Conduct on-site due diligence (required only for higher credit tiers)

For higher credit tiers, the Kiva analyst will also visit the organization for on-site due diligence. Some organizations may not receive an on-site visit due to risks of traveling to the country where the organization is located. In those cases, the Kiva analyst meets with representatives of the organization in an alternate location or leverages external sources, such as references and other rating information.

During an on-site visit, the Kiva analyst interviews members of the board and management team, loan officers and borrowers. In addition, the analyst reviews documentation, reports and the management information system of the organization.

Step 3: Prepare a due diligence report

After the Kiva analyst has reviewed the potential Field Partner’s application and has completed the on-site visit if applicable, we prepare a due diligence report. This report includes some or all of the following components, depending on the proposed credit tier:

Organizational overview: A summary of the organization’s mission and history, governance and management, technical and operational infrastructure and proposed use for Kiva funding.

A review of the pricing structure of each loan product that the organization proposes to fundraise on the Kiva website. Many factors impact what it costs an organization to provide financing, including the local supply of capital, the local currency risk, and the local infrastructure and cost of doing business. There is also a relationship between the size and term of a loan and its average cost: small loans with short terms cost more to administer and thus have a higher average interest rate for borrowers. Due to this complexity, Kiva doesn’t set a firm maximum cost that a Field Partner can charge a borrower for a loan, but we focus the review on ensuring that the pricing is in line with local market context and industry standards.

Financial analysis: This is created with a financial analysis tool tool that tracks data from the organization’s financial statements and portfolio reports and calculates key ratios. Outputs from the financial analysis tool also feed into the proposed risk rating, if applicable.

Proposed risk rating: The Kiva analyst proposes a risk rating of between 0.5 to 5 stars to represent the estimated risk of institutional default. To calculate the risk rating, we use Kiva’s risk model, which assesses the organization on a point system based upon the following areas of focus: governance, management, transparency, business model, loan product(s), financials and external factors. A 0.5-star rating means the organization has a relatively higher risk of institutional default, while a 5-star rating indicates the organization is at a relatively lower risk of default, based on our analysis and the available information. (Note that Field Partners in the lowest credit tier undergo a lighter level of due diligence and hence do not receive a risk rating. Instead, in places where a risk rating would normally appear on Kiva’s website, these partners are labeled as “Experimental.”)

Proposed social performance badges: To represent the Field Partner’s social performance strengths, Kiva uses a social performance scorecard to award social performance badges. We assess the organization on a points system based upon the following areas of focus: Anti-Poverty Focus, Vulnerable Group Focus, Client Voice, Family and Community Empowerment, Entrepreneurial Support, Facilitation of Savings, and Innovation. (Note that Field Partners in the lowest credit tier undergo a lighter level of due diligence and and for that reason are not eligible for social performance badges.)

Step 4: Submit for approval

The Kiva analyst submits the due diligence report to members of Kiva’s investment team, who review the proposal, communicate with the analyst in case of questions, and vote on whether to approve the organization for partnership..

For an approved Field Partner, the investment team also approves the final credit tier, which determines the Field Partner’s credit line.