Startup Junkie will work with Kiva US to launch a local hub, Kiva Northwest Arkansas, in an effort to help underserved entrepreneurs and small business owners gain access to much-needed capital.
The partnership with Kiva, an international nonprofit based in San Francisco that connects entrepreneurs and small business owners with local lenders, is made possible through the technical assistance provided by Startup Junkie and funding from the Walton Family Foundation.
Kiva is a Swahili word meaning agreement or unity, commonly used in eastern African countries. The Hopi and Pueblo tribes of the United States also use the word Kiva, referring to community meeting hut.
“Kiva is the perfect word for this micro-loan program, wherein economically and historically disadvantaged borrowers are supported by their community,” said Startup Junkie Executive Consultant Martha Londagin
Through Kiva Northwest Arkansas, members of the community can sign up to lend money to local entrepreneurs. According to Londagin, loans granted through Kiva are made up of five to 20 initial local contributions of as little as $25 before launching to the national community, where a borrower can access up to $10,000. These loans are offered to those who have difficulty securing traditional loans and are offered at zero percent interest with no fees. The process requires no credit score, collateral pledges or U.S. citizenship documentation.
“Then, for those residing in Benton and Washington counties, the Kiva approved loan also becomes eligible for Walton Family Foundation matching loan funds,” Londagin added.
The Walton Family Foundation has provided $100,000 in matching funds to Kiva. All borrowers with businesses in Washington or Benton counties will be eligible for a dollar for dollar matching loan to help them meet their funding goal more quickly if their Kiva loan request is approved.
“Our entire community will have the opportunity to support the growth of new businesses that would not otherwise exist and put them on the path to success or lift up our existing businesses,” said Londagin. “These small community loan pledges take the place of traditional credit score requirements and personal or business collateral pledges. With Kiva, the borrower’s community vouches for them as being worthy of the Kiva loan program.”
The repayment rate is approximately 97 percent. Through Kiva Northwest Arkansas, Startup Junkie will provide technical assistance to borrowers and small business owners, including assistance to borrowers with the application process, working with them step-by-step, to increase the likelihood of Kiva approval. While lenders can find U.S. borrowers through Kiva without going through the hub, having a local partner increases the likelihood of success for local entrepreneurs.
“From Kiva, I believe that a model where a local organization works with Kiva and is funded by a local foundation sets a great precedent for other cities to follow,” said Sarah Adeel, Kiva regional manager for the west and south-central United States. “It is the most innovative way for cities to offer financial inclusion to their small businesses, especially those rejected by other financial institutions. It will help scale the impact through multiple stakeholders focused on solving a problem together, as well as building a local lending community.”
Startup Junkie is encouraging readers to help by completing a survey on Kiva.
The Journey of a Kiva Loan:
1. A borrower applies for a loan with the Startup Junkie assistance.
2. The loan goes through the Kiva underwriting and approval process.
3. The loan is posted to Kiva for community lenders to support.
4. Fundraising period: Lenders crowdfund the loan in increments of $25 or more.
5. Borrower repays the loan, and community lenders are repaid via Kiva.
6. The lenders use repayments to fund new loans, donate or withdraw the money.
Fast Facts:
· Small businesses create two out of every three new jobs in the United States.
· Startup Junkie provides no-cost consulting to over 800 local entrepreneurs annually.
· More than $1.4 billion has been loaned through Kiva.
· Kiva is made up of over 1.9 million lenders and 3.4 million borrowers.
· More than 1.6 million loans have been funded through Kiva.
· Approximately 81 percent of Kiva borrowers are female.
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