Kiva…Loans That Change Lives

By Tammerlin Drummond
The Oakland Tribune.

One of the biggest challenges for people trying to start or expand a small business is they can’t qualify for a loan under banks’ strict lending guidelines. This is especially true in underserved communities.

Many entrepreneurs resort to taking out high interest personal loans on their credit cards, a high risk proposition.

Enter Kiva. The San Francisco nonprofit first began using crowdsourcing in 2005 to make microloans to poor people in foreign countries.

In 2011, Kiva brought its innovative model to the U.S. to give domestic small businesses a much-needed financial boost.

In Oakland, Kiva Zip loans have helped finance 50 businesses, including bagel and bakery shops, soap makers, clothing stores and suppliers of do-it-yourself urban farm supplies.

Eligible small business owners and startups can apply for Kiva Zip zero-interest loans — up to a maximum of $5,000 initially. Applicants don’t need collateral or proof of assets. But they must have a “trustee” — a person or individual within the community to publicly vouch for their reputation and business plan. Kiva staff review the applications and select the recipients. When the business owner repays his loan — the time limit is two years — the money goes back to investors, who are then free to reinvest in another Kiva Zip business.

According to Kiva Zip, there have been only a tiny fraction of defaults.

Yolanda Burrell, co-owner of Pollinate Farm & Garden, got a Kiva Zip loan for $5,000 a year ago. In 2013, she and her partner, Birgitt Evans, had used their savings to open the Fruitvale store, which sells a vast array of supplies for home gardens and small-scale livestock raising to people who grow and raise their own food.

Customers would wander in and say they couldn’t find the store because there wasn’t a sign. “We couldn’t pretty up the building anymore than the lipstick on the pig that we had already done because we didn’t have any money for anything but merchandise,” Burrell said.

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