Kiva, the microfinancing startup, has changed its rules so that Kiva Credits — microloan payments made to lenders — now expire after five years.
In a blog post, Kiva officials said the rule change was a result of state regulations:
Because of state laws, however, if you don’t use your account for roughly 3-5 years, many states require us to consider your funds as “abandoned property” and turn it over to the relevant state government for safekeeping on your behalf.
Kiva now offers the option for lenders with Kiva Credits outstanding to either: 1) make a request for the money; 2) allow for the funds to be re-lent through the site; or 3) allow for the funds to be donated to Kiva.
The rule changes apply to inactive Kiva accounts, meaning those that have not been used or modified in 24 months.
The change is yet the latest example of government regulation impinging on startup online lending ventures. For several months now, peer-to-peer lenders have been forced to register with the Securities and Exchange Commission as investment enterprises selling bonds. Prosper, for example, continues to be embroiled in this regulatory handcuff.
More than $140 million of loans have been made through Kiva. The site boasts more than 720,000 members.
JJ started the first iteration of Bank Innovation back in 2007, and has been working on it ever since. He also serves as President & Chief Executive Officer of Royal Media, Bank Innovation’s parent. He founded Royal in 1995 and oversees all aspects of the New York-based diversified media company. Prior to forming Royal, JJ was on the editorial staff of American Banker, the daily newspaper, and worked as an editor of a business magazine in Hong Kong. As a reporter and editor, he has won journalism awards from the National Press Foundation, Newsletter & Electronic Publishers Foundation, and the Reader’s Digest Foundation. He has a BS in Economics from Yeshiva University and a Master’s from the Columbia University Graduate School of Journalism. He was also a Fellow at the University of Wisconsin-Madison Graduate School of Banking. He lives in New York City with his wife, two daughters, and son. He counts among his accomplishments one New York City Marathon, two New York City Triathlons and the 2010 Father’s Day 5K, the first race he ever ran with his daughters. He can be reached at email@example.com or 212-564-8972.