Kiva Loans are a type of microloan that’s crowdfunded. This nonprofit organization is powered by donations, loans, and grants from users like you. They distribute the funds to nonprofits, schools, and business owners in developing countries, among others, providing what’s known as social capital.
If you’re a business owner who’s interested, here’s what you need to know about getting a Kiva business loan. The best part? They don’t charge interest or fees.
Kiva is based in San Francisco and lends money to American businesses that can’t secure traditional financing. It’s similar to other crowdfunding platforms, with individual lenders able to contribute as little as $25. While loans are repaid, lenders shouldn’t expect a 100% return. The loan amount a business owner can apply for depends on various factors, and there’s a unique social underwriting process involved.
The Kiva team plays matchmaker, pairing lenders and borrowers. They work with Kiva lenders to support financially excluded individuals. Many Kiva borrowers are business owners in emerging countries who receive loans through local Field Partners. You can get involved and endorse borrowers from your personal dashboard. Kiva collaborates with over 290 microfinance entities in 77 different locations. When a loan is funded, these partners collect repayments. Many loans are pre-disbursed, meaning the borrower gets access quickly.
In the US, these loans are direct, with no Field Partner involved. There are several advantages for a small business. Businesses can hire employees, expand a product line, pay for legal fees and other services, market their business, and buy new equipment. This kind of public fundraising can also attract new customers.
To qualify for a Kiva loan from Microfinance Institutions, the loan must be for business purposes, and you must be at least 18 years old. Your business cannot be in bankruptcy or foreclosure. You should have a solid business plan and be socially aware. Kiva contacts applicants several times during the process, so responsiveness is key.
The Kiva application process involves gathering your financial info, having a business plan, determining the loan amount you need (up to $15,000), describing your business type, and going through a private fundraising period.
Unfortunately, you do need a PayPal account to get a Kiva loan. Kiva only conducts monetary transactions through PayPal for security and reliability. They do not accept dollar bills or coins, checks, wire transfers, money orders, or other money transferring systems like Venmo, Google Wallet, Apple Pay, Skrill, or Facebook Message payments.
You do have to pay back a Kiva loan with monthly payments starting one month after you receive your money. If you’re having trouble, you can email the company or reach out to the Kiva trustee that vouched for you.
Kiva has been around for 15 years and is a legitimate organization. They’ve helped 2.5 million people globally, but there is a risk of principal loss. The company doesn’t guarantee repayments or any kind of financial return. Lending or borrowing through Kiva involves risk. They have a four-star rating on Charity Navigator, a website that evaluates nonprofits for their sustainability, efficiency, and stability.
Using a Kiva loan to finance your business is a great option for startups without business credit. The interest rates are zero, and there’s no credit check. Field partners can help you raise capital, screen borrowers, and collect repayments. You can qualify with bad credit or no credit, and the financing is flexible. Once you get a loan, you can use the money for many of your business expenses, including marketing, inventory, payroll, new equipment, or almost anything else.
