Impact-First Microloans with Kiva Support Small Businesses during Economic Downturn

Cisco has partnered with Kiva on multiple initiatives, as part of our efforts to support entrepreneurs to start small businesses, and bank the unbanked. We have provided cash grant investments for early stage Kiva concepts which now are operating at scale, as well as donations of Cisco technology which Kiva uses to run their operations.  Last year, Kiva facilitated support to nearly 1,000 small business owners across the U.S. These small business owners are as diverse as are their businesses:  68 percent of the entrepreneurs are people of color and 63 percent are women. Kiva’s impact is felt not only by the small business owners themselves, but also in the communities in which they operate. More than 80 percent of Kiva-supported business owners reported increases in revenue and profitability. This means that these business owners have higher incomes to support themselves and their families. It also has enabled more than half the business owners to hire new employees – creating jobs and stimulating economic development in their communities. 

In the current economic environment, many of these small business owners are struggling and yet may not be able to access government support programs. Kiva is supporting their existing small business owners, as well as expanding their services to support other entrepreneurs whose businesses now are struggling. Kiva’s innovative business model and use of technology has enabled them to quickly pivot to meet new and emerging needs, and also to rapidly accelerate their reach to support more people. We are proud to partner with Kiva to support small businesses across the U.S.

This post comes from Katherine Lynch, senior manager, Kiva U.S.

Whether it’s a neighborhood coffee shop producers at a local farmer’s market or a community day-care, millions of American businesses are now disrupted as employees and customers must stay home and shift their daily norms.

According to an analysis conducted by Next Street, the recent pandemic will create  a $42 – $120 billion cash shortfall among small businesses in the U.S. Businesses serving traditionally underinvested communities, including those that are minority-led, women-led, face exceptionally disproportionate impacts as a result of the COVID-19 shutdowns. These businesses are less likely to have the cash revenues, access to credit, funds to support paid leave, and ability to work remotely that will sustain many other industries.

Facing dramatic reductions in revenue, small businesses and entrepreneurs are currently looking for financial capital to survive the next trying months, and eventually to return to business as usual. While other financial institutions are constricting risk tolerance, the Kiva platform and lending community can offer critical support to businesses through the relief, recovery and rebuilding phases of the disaster response.

Kiva is proud to have an impact-first, investment-in-people approach with the mission to expand financial access to help underserved communities thrive. Designed to be as accessible and risk-tolerant as possible, we provide small crowdfunded loans at zero percent interest to financially excluded populations, creating entrances to financial opportunity. In the current difficult and evolving circumstances, Kiva remains free and agile to deploy capital assistance to a range of business types and entrepreneurs across the U.S. market. Extending support further, U.S. applicants for a Kiva loan now have access to the following:

• Expanded eligibility: More businesses in the U.S. are eligible for a zero percent interest Kiva loan.
• Larger loans: The maximum loan on the Kiva platform has increased from $10,000 to $15,000.
• Grace period: New borrowers may access a grace period of up to six months for greater financial flexibility.

Since announcing the expanded offerings, Kiva has seen a 5x increase in small business loan applications across the country. Aiming to review thousands of applications and provide small businesses with zero percent interest loans, Kiva remains grateful for the generosity of its lender and partner ecosystems, which continue to show incredible encouragement to borrowers, one $25 loan contribution at a time.

Most recently, Kiva’s powerful community championship was displayed through the borrower story of Hunter, owner of Oklahoma Distilling Company, whose $15,000 loan was fully crowdfunded by 193 lenders in less than two days of being live on Kiva.org. Hunter is using the loan to bulk-buy ethanol and convert his distilling company in Tulsa to make hand sanitizer. To pay it forward, Hunter will donate all proceeds back to local food and beverage industry workers who have been laid off or furloughed.

Since program inception in 2011, Kiva has supported over 6,200 U.S. borrowers with access to more than $36M in loan capital, proudly including in its portfolio 63 percent women entrepreneurs, 68 percent entrepreneurs of color and 46 percent borrowers with credit scores of <650, of which 60 percent had been rejected for other forms of financing before coming to Kiva. As Kiva’s model was designed as a solution to the systemic barriers encountered by excluded entrepreneurs in accessing capital in the U.S., now more than ever Kiva stands out as an accessible financing tool for businesses willing to put their social capital on the line.

If you are an entrepreneur or small business owner who believes you can benefit from a Kiva loan, or you know one in your community, please visit kiva.org/borrow to apply for a loan.

To join Kiva in supporting small business owners, click here to make a loan today!