Enoma Ighedosa started his own vending machine company, Good Life Vending, a year ago with ten vending machines around KC. Looking to expand, Ighedosa went to his bank to try and get a business loan but was denied.
“I knew it was a low chance; my business doesn’t have a long financial history, and honestly, I am a Black business owner, and it’s been extremely documented how banks discriminate against Black business owners more than White ones, so I wasn’t really surprised,” says Ighedosa.
Ighedosa was referred to a new program called Kiva KC, which offers up to $15k in interest-free, crowd-sourced, micro-loans that don’t take credit history into account.
Those looking to expand or jumpstart their business can get their story uploaded to Kiva’s website, where 1.6 million worldwide lenders have the opportunity to fund upstart entrepreneurs. Ighedosa says his business has only been on Kiva for a couple of days and is already 40% of the way towards his $5,000 goal.
“A crowdfunding loan [like Kiva] can be a great alternative option for minority-owned businesses to get funding versus traditional loans from banks,” says Ighedosa.
Kiva KC Origins
The City of Kansas City’s Bizcare office partnered with Economic Development Corporation of KC (EDCKC), to bring the first Kiva hub to Kansas City as a component of its new small business “starting” capital programs launching in 2024.
Last year, the City of Kansas City participated in the City Inclusive Entrepreneurship (CIE) program for microlending sponsored by the National League of Cities. Through its participation, Kansas City committed to building a platform for microlending to serve entrepreneurs without access to traditional finance.
The commitment included the establishment of a local Kiva Hub and the hiring of a new Capital Access Manager to implement the program.
“Their program gave us the tools and resources we needed to bring the first hub to Kansas City,” said Nia Richardson, managing director of small business and digital equity with the City of Kansas City.
Kiva started overseas in 2005 with lenders supporting things like funding for single mothers in Guatemala to make handmade baskets. After the success of the overseas model, in 2011, the program was brought to the United States.
Kiva, a nonprofit, makes money from donations and fees rather than loan interest for the hub model. A grant from the National League of Cities funded the Kiva KC hub.
“Here with the Kansas City hub, the goal is to expand accessible capital for businesses who are just starting up or if they’re established but just need a quick infusion of capital. Kiva is an option for them,” says Regina Sosa, Capital Access Manager for Kiva KC.
“This relationship will allow us to guide and support crucial small businesses that help our economic ecosystem expand while also bringing in disadvantaged participants that are typically excluded,” said Tracey Lewis, president and CEO of EDCKC.
How Kiva Microloans Work:
- Loan Application: Entrepreneurs apply for loans ranging from $1,000 to $15,000 through Kiva.org/borrow, then meet with the KivaKC team to review or edit the application as needed.
- Social Underwriting: Approved borrowers are required to invite 5 to 40 friends, family, or folks from their personal network to lend as little as $25 each, demonstrating creditworthiness through social connections.
- Fundraising: Once the borrower’s social underwriting goal is met, they are listed on Kiva’s online platform to raise the remaining loan amount. Nearly two million worldwide lenders can see the entrepreneur’s pitch and can choose to fund the business; corporate sponsors often offer to match for donations to Kiva businesses.
- Repayment: Loans are disbursed and repaid through PayPa. Borrower can repay the loan over 12 to 36 months. Businesses can also reapply for larger amounts after repayment..
Who Lends Money for Kiva Loans:
Initially, the entrepreneur’s friends, family, and social network pitch in to show that the venture is viable. From there, the loan is financed by people worldwide, much like GoFundMe or Kickstarter.
“Typically, the lenders who are on kiva.org are doing it for the impact because they know with as little as $25, they can contribute to someone’s dream of expanding or opening up their business,” says Regina Sosa.
Once a loan is repaid, lenders can use the same money to support another project. In theory, this means that the same $25 can be used to help upstart businesses over and over in a virtuous cycle. According to Kiva, 96.4% of their microloans are repaid on time, offering a low risk to lenders.
To Qualify for Kiva Kansas City
- Borrower and business must be U.S.-based.
- The borrower must be 18 years of age or older.
- The loan must be used for business purposes.
- Businesses must not be engaged in multi-level marketing, direct sales, pure financial investing, or illegal activities.
- Borrower or business must not be currently under foreclosure, bankruptcy, or under any liens.
- Home-based businesses are eligible for a Kiva loan.
- Businesses must have a business bank account connected to PayPa since Kiva loans are disbursed and repaid through PayPal.
Applications are now open and are accepted on a rolling basis for entrepreneurs interested in accessing affordable capital through Kiva KC. Learn more and apply at www.kiva.org/borrow, or contact Kiva KC via email at Kansascity@local.kiva.org or by phone at 816-691-2120.