No, interest is not paid to you on the loans that you provide. Lenders do not receive interest on their loans because lendwithcare.org does not charge interest to our MFI partners. However, MFI’s do charge interest to their clients in order to cover operational costs. When we select our MFI partners, though, they have to meet various criteria, including charging a reasonable and fair interest rate relevant to the local context.
The interest free capital they receive from lendwithcare.org enables them to either lend to slightly poorer clients than they might otherwise, or to move into other more distant areas. For example, in Togo our MFI partner is able to operate in more isolated rural areas which are more expensive for them to run due to the logistics of receiving applications and collecting repayments. In some cases, such as the Philippines and Ecuador, our MFI partners have actually passed on the benefits of receiving interest free capital from lendwithcare.org to their clients through lower interest rates.
Our MFI partners also receive a small yearly grant from lendwithcare.org which covers the additional costs they have to incur in photographing their clients, writing up information for the lendwithcare.org system and generally administering repayments to lenders.