Business, Development

Kiva microlending does good, helps businesses do well

In its first year, Kiva, a non-profit microlending organization, helped fund a spinach farmer in Cambodia, a hot dog stand man in Nicaragua, a carpenter in Gaza, a bee keeper in Ghana, and a fish seller in Uganda. Behind each of these businesses lies a story. Now we can add Detroit stories to the mix.

Microlending for business owners is now a reality here, thanks to a partnership between Kiva, Michigan Corps, ACCION USA and Knight Foundation.

At an announcement in Shed 2 at Eastern Market, Detroit became the first city in the United States with a Kiva program and the gathered crowd was introduced to the first five businesses funded.

By using the Kiva model for microlending … Michigan Corps to find business owners in need, ACCION USA for getting the business owners ready to accept credit and the Knight Foundation to match investments … this collaboration is taking a unique approach to helping people take their business ideas off the shelf and put them into action.

Think Kickstarter with a repayment plan.

As Paul Quintero, CEO of ACCION USA noted, it is the people who make this project unique.  “This is the first time, to my knowledge, that an effort has been made to create a coalition from churches to people to all 50 non-profits that are represented, so that we could really reach individuals, because that’s who we want to serve,” notes Quintero.

When his Boston-based company was approached to collaborate, he readily accepted due in part to the commitment of one of his staff members to her hometown, Detroit.  As he introduced Elizabeth Garlow to the audience, he spoke glowingly about her dedication to making sure she did something meaningful in Detroit.

“She went in. She worked personally with the organization to train them on what we require in our process,” he said.  “She knows each and every entrepreneur, not just those funded but the many Kiva friends who are here. We tried to connect and make this personal because that’s really what this was. Even though this is the beginning of a program, it’s at least the end of her journey to do something meaningful in her hometown of Detroit.”

The daughter of two school teachers witnessed the city struggling to regain the vitality it once had.  Garlow strongly believes that supporting entrepreneurs is the key piece in building a resurgent Detroit.

“I believe that ACCION provides an essential service to helping build businesses. I wanted to see that entrepreneurial activity flourish in the city of Detroit, so it was important to me,” she said. “We have the tools. We have the skills to lend. I wanted to bring it on the ground in Detroit.”

Her work helped to create a strong coalition, which is something Quintero says is completely unique in the world of microlending for businesses.

Business that are coming to Kiva Detroit tend to be businesses that are in the starting stages of business, so they end up using the capital borrowed to either acquire equipment or inventory for the business.  Once a business has qualified for a loan, the business owners are connected with local services in areas where business owners need ongoing support.

For example, they work with SCORE to make sure the financial side of a business stays healthy. ACCION USA helped two of the Detroit businesses that have received Kiva Detroit funding find and report errors on their personal credit reports.  Another business used some of the money loaned to them to take classes from TechTown in business finances.

To Matt Flanery, co-founder and CEO of Kiva, it is the collaborative culture among Detroit’s entrepreneurs that makes this program attractive. He was quick to point out that this is a hand up, not a hand out.

“One thing about Kiva is it’s not a sophisticated commercial financial instrument but it’s not charity either,” he mused.  “It’s something in between and there is a lot of wonderful stuff that can happen between those two spaces when you have people connecting to other people through lending.”

 

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