Kiva Launches Business Lending Platform in Oregon
We recently interviewed Kiva Fellow Stasi Baranoff about Kiva Zip, a new peerlending platform for small businesses in the US and Kenya. With the program set to launch in Oregon next week, we’re proud to announce that Impact Entrepreneurs has been selected to be a Kiva Zip trustee. Read on to learn more about Kiva Zip and the role of trustees in helping small businesses source zero-interest loans through the program.
Kiva is an international non profit that helps underserved, financially excluded, and socially impacful entrepreneurs start or grow their business. In the past seven years we’ve supported over one million entrepreneurs in over 70 countries.
The 940,000 individual lenders on Kiva can lend as little as $25 to borrowers posted on the Kiva website, and all of these $25 “shares” together can make up a significant loan. In 2011, Kiva began a program in the U.S. to reach domestic borrowers called Kiva Zip. By using PayPal, loans that are crowdfunded on Kiva Zip’s website can be sent directly to a borrower at 0% interest.
Impact Entrepreneurs: How would you describe Kiva Zip in a single tweet?
Stasi Baranoff: Lend to an entrepreneur in Oregon, invest in your community! https://zip.kiva.org/loans/s/oregon
How is Kiva Zip different than Kiva?
Kiva Zip is a pilot program in the U.S. and Kenya where Kiva is testing new ways to crowdfund for social good. With Kiva Zip you can:
· Help a borrower receive a 0% interest loan. This differs from typical Kiva loans where partners charge interest to cover their operating costs.
· Directly communicate with borrowers: Once you’ve made a loan, you can post and receive messages from that borrower as they succeed.
· Bring new borrowers to Kiva Zip: In addition to lending, you can vouch for someone to be a Kiva Zip borrower by becoming a trustee. You can apply to be a borrower too.
Kiva Zip is an exciting new step, but it comes with some risk — the repayment rate for Kiva Zip is lower than the nearly 99% for Kiva. In exchange for this increased risk, you have the opportunity to experiment with lending in a new way that could change the world.
What do the loans look like?
· Loan #1 :: Maximum loan = $5,000 :: Loan term = 10 to 24 months
· Loan #2 :: Maximum loan = $10,000 :: Loan term = 12 to 36 months
· Loan #3 :: Maximum loan = $20,000 :: Loan term = 24 to 48 months
· Loan #4 :: Maximum loan = $50,000 :: Loan term = 48 to 72 months
Who qualifies for a Kiva Zip loan?
There are a number of criteria, as assessed by trustees, that borrowers must meet, in order to qualify for a Kiva Zip loan:
· The borrower must have a real social and economic need
· The borrower must have a sound business plan
· The borrower must not be heavily indebted
· The borrower must not be in bankruptcy or foreclosure proceedings, or about to enter into them
· The trustee must endorse the borrower’s character
· The trustee must determine that the borrower is financially responsible
How does the application process work?
A Trustee and borrower would typically decide together that the borrower is ready for a Kiva Zip loan. Then the following steps occur:
1. A Trustee endorses the Borrower by answering a few questions on the Kiva Zip website.
2. The Borrower receives an email letting them know they’ve been endorsed; they are then led to the Borrower application on the Kiva Zip website.
3. Once the Borrower completes the application, it is submitted to the Trustee for review.
4. The Trustee reviews the application and then submits it for Kiva’s review.
5. Kiva reviews the application and then posts it to the Kiva Zip website!
What role do trustees play in this process?
Trustees source Kiva Zip borrowers, review the borrowers’ businesses, and publicly endorse them on the Kiva Zip website, specifically by vouching for their character. They maintain a relationship with the borrower throughout the duration of the borrower’s fundraising and repayment period.
What’s next for Kiva Zip?
There’s a lot in the pipeline for Kiva Zip. We’re launching in Portland on June 27th, and we’re so excited for the enthusiasm for the program here. Later this summer, there will be launches in Newark, New Jersey and Richmond, Virginia. Spreading Kiva love!