Group loan

From Kivapedia

[edit] Group Loans

In a group loan, each member of the group receives an individual loan but is part of a group of individuals bound by a 'group guarantee' (sometimes called 'joint liability'). Under this arrangement, each member of the group supports one another and is responsible for paying back the loans of their fellow group members if someone is delinquent or defaults.

[edit] Why do some partners post group loans?

Group loans are a powerful innovation in microfinance, because they are often less expensive for partners to manage in terms of time and resources. In a group, microfinance institutions can leverage the local knowledge of individuals to select good borrowers; disburse many loans at once; collect repayments in a group; and more easily follow up on delinquent loans, as group members have an incentive to work with each other to ensure on-time repayment. By using these efficient aspects of group lending, microfinance institutions can issue more loans in smaller amounts to the poorest.

• See also Kiva's FAQ on Group Loans