Part one of a three-part series on Kiva and its largest Oakland trustee Centro Community Partners
Kiva is at the forefront of micro-lending, providing small loans to artists and craftspeople and minority business owners in Oakland and throughout the world. Connecting small investors with needy projects, Kiva hopes to reduce unemployment by creating businesses that can hire people in economically challenged communities.
Centro uses web and mobile technology to provide new on-line tools to help any business clarify its mission and build a business plan.
Kiva and its Kiva Zip arm collect lender funds from people all over the world and then act as a financial and operational intermediaries to borrowers who need micro-loans. They have provided over $500 million in 1.2 million loans around the planet.
In Oakland, this effort has helped fledgling businesses start and expand. Many of the recipients participate in farmers’ markets, Oakland specialty boutiques, and Art Murmur locations. Local businesses Kiva helped include lOAKal Gallery and boutique, Platinum Dirt leather goods, RB Squared Solutions for eCommerce, and Skincare by Feleciai.
Some other Oakland recipients of Kiva Zip loans include Mandela Foods Co-op, Besto Pesto, Hella Fresh Juice, Sugar Knife Artisan Sweets, “true ferments” by True Family Foods, and Full Harvest Urban Farm.
In partnership with PayPal, Kiva transfers micro-loans free of charge in the US and allows repayment at zero interest. The funds for these loans are raised through Kiva’s web-based crowd funding platform.
Kiva Zip: Committed to small-business partnerships
Kiva Zip is partnering with many community-based organizations (CBOs) who propose loan candidates and act as loan trustees to support the new projects and achieve higher rates of success and loan repayment. In Oakland, one of their principal loan trustees is Centro, a CBO in Oakland’s Old Town that provides both loans and training to economically under-served communities and minorities in Oakland, Richmond and Hunter’s Point, San Francisco. [Centro will be profiled in the next part of this series.]
LiveWorkOakland met recently with Justin Renfro, Kiva Zip’s coordinator and (officially) Associate Manager of Business Development, at Kiva’s headquarters in San Francisco near the Moscone Convention Center to talk about Kiva Zip, Oakland, and their mission.
“We are giving very small loans that are crowd-funded on our website,” Renfro told LiveWorkOakland. “We have 100 full time staff … We also have about 35 interns in the office and we also have about 40 volunteers worldwide. We’ve got our San Francisco office, we’ve got our office in Nairobi, Kenya, and we have a few other employees in other markets, Istanbul, Southeast Asia, and India.”
Kiva was founded in Uganda and was initially focused on the developing world. “We are at the intersection of crowd-funding and micro-finance,” Renfro said. “Over the past 5 years, we have made over $500 million in loans from over a million people around the world and we have a repayment rate of near 99 percent.
“We know that small businesses create 2 out of 3 jobs in the U.S., yet banks are rejecting 7 out of 10 small business loan applications. But if only one out of three small businesses hired an extra person, we’d have full employment,” Renfro said.
Why is the rejection rate from banks so high? Renfro said most banks and lenders use an established set of traditional criteria that doesn’t fit start-ups and minority business owners very well. These include credit scores, income shown in tax returns, loan collateral such as property, or number of years in business. “These criteria are rejecting this massive pool of entrepreneurs that need capital to be able to grow. And Kiva Zip aims to service that population.”
“Where a bank would reject an entrepreneur based on credit scores or years in business, Kiva Zip is looking at a new way to evaluate entrepreneurs. We’re doing it through social underwriting, ” Renfro added. “We look at someone’s character, reputation, the relationships they have and their network, to establish how credible they are as a borrower. That’s our new paradigm….[to] support more entrepreneurs.”
In Kiva Zip’s criteria, they look at both financial exclusion and also social impact to the communities their borrowers serve, Renfro explained. “We have a very broad view of social impact, but we hope that the majority of entrepreneurs that come to Kiva Zip have both a high degree of financial exclusion and have a high social impact with these loans. Our focus is more on the mom and pop shops and business that are just getting started.”
Renfro described one of Kiva Zip ‘s loan recipients, Skincare by Feleciai, in Oakland. “Feleciai needed a $5,000 loan to build her web site and to buy more materials to make more soaps. She repaid her $5,000 and then applied for a $15,000 loan on Kiva Zip. And that $10,000 loan was funded by 504 people around the world that read her story… maybe went to her website or went to her Facebook page. These 504 people not just invested by lending five, ten, 25 or 50 dollars, but also invested emotionally….These 504 people… are potential customers, potential ambassadors, telling their friends and family, and they are giving support to Feliciai [online]. ”
Founded in 2010, Centro Community Partners (Centro) is on a mission to teach under-served women and minorities to become effective entrepreneurs by providing access to capital and one-on-one entrepreneurship education, credit repair, and technical assistance.
“Centro community… is one of our best trustees in the nation,” Renfro told LiveWorkOakland. Centro has provided 7 recommendations for $70,000 in loans. “They are incubating new start-ups and businesses and they recommend these to us.”
Some other East Bay Kiva Zip trustees include the City of Oakland, Oakland Community Church, Oaklandish, and the Native American Health Center, among others.
(Learn more about Centro Community Partners in the next story of the series.)