An exciting and promising new endeavor is coming to the Santiam Canyon this fall thanks to the GROW EDC board. GROW recently voted to become a trustee of KIVA Zip, a San Francisco-based non-profit providing technology and structure that allows financially excluded and socially impactful entrepreneurs to access zero percent business loans up to $5,000 for the first loan and $25,000 for subsequent loans, for up to a 24-month term. To be eligible an entrepreneur must be at least 18 years old and not currently in bankruptcy or foreclosure.
The role of the trustee is to help KIVA Zip identify entrepreneurs who could benefit from their program, publicly endorse them on the website and provide ongoing support throughout the loan term. As the local trustee, GROW will begin by putting an endorsement committee together over the summer. This committee will help screen entrepreneurs based on character, trust, reputation and social impact rather than traditional financial metrics. This committee will be a separate decision-making group from the GROW ● EDC board, though as trustee, GROW holds the final responsibility to endorse potential borrowers to KIVA Zip. “When we vouch for the character, business and social impact of the entrepreneur, we are saying these are credible borrowers,” says McKenzie.
“This process is based a lot around the story of the person who owns the business. We will help the entrepreneur tell his or her story in an effective way that makes it compelling for potential lenders to invest in that person,” explains McKenzie.
These loans are crowd-funded by hundreds of lenders, both locally and around the world, who may lend as little as $5 each to rally around an entrepreneur as potential customers, business advisors and brand ambassadors. Unlike traditional lending avenues, borrowers are required to reach out to at least 15 lenders from their own network and that of the trustee before the KIVA worldwide network kicks in. “The upshot is that people in the community get literally invested in these businesses, so there are a whole bunch of people rooting for them,” says McKenzie.
“We can recommend up to three entrepreneurs in the first round and once we see that the money is starting to be paid back, we can begin to add other people to the queue,” says McKenzie.
Loans are generally paid off in six to 12 months, sometimes in weekly or monthly installments. The most successful loans are those that are for things to help bring in business and increase profitability.
“We are excited about this program because it fits so closely with our mission. We can help entrepreneurs we believe in find funding and simultaneously improve the economic vitality of our communities,” says board member Sue Nichols.
According to kiva.com, the organization made its first loan in Uganda in 2005, and has since made over one million loans in 75 countries. KIVA Zip aims to improve access to capital, support entrepreneurs who would not qualify for conventional loans, and facilitate local and global connections that have a positive social impact. Kiva brought its micro-lending platform to the U.S. in 2013.
GROW’s crowd-funded microlending program will roll out this fall for entrepreneurs who reside within the GROW ● EDC service area, including the communities of Aumsville, Scio, Stayton, Sublimity, Lyons, Mehama, Mill City, Gates, Detroit and Idanha. To learn more, contact Allison McKenzie at 503.871.5188 or firstname.lastname@example.org.