Yesterday, micro-lending nonprofit Kiva announced a partnership with Intuit, the software company behind TurboTax, Quickbooks and Quicken, to help small businesses access capital at the click of a button.
Through a $50,000 donation from Intuit’s Freedom Foundation, the company estimates that nearly 500 small businesses will be funded on the Kiva Zip peer-to-peer lending platform every month.
The initiative is another step forward in eliminating barriers to financing and improving economic outcomes for individuals pursuing entrepreneurship and self-sufficiency.
Applicants who don’t qualify for Intuit’s traditional loan programs will be encouraged to create a profile on the site to raise funds for their business. Loans start at $5,000 and can go up to as much as $10,000.
“We are excited about our partnership with Kiva Zip and to offer small businesses the critical capital they need to start and grow their businesses,” said Jeffrey Kaufman, business leader of QuickBooks Financing at Intuit. “This platform serves a segment of small businesses who previously had no, or very limited opportunities to get the funding they needed. Additionally, the Intuit Financial Freedom Foundation donation is one way Intuit is supporting small businesses across the nation to give them a chance to thrive.”
A veteran in the micro-lending business, Kiva brought its Zip platform online across the U.S in 2014, partnering with city governments and corporate partners to crowdsource almost $10 million in interest-free loans.
Individuals can make small loans directly to entrepreneurs online with as little as $5. There’s no credit check or intimidating interview required. Instead, Kiva Zip relies on “character or credit” and requires that borrowers start by inviting family and friends to launch fundraising efforts. Upon reaching a designated threshold, the business is then featured among the online community, where it can garner additional funding support. Business owners are also able to set up manageable payment terms. Once the loans are repaid, they have the option to apply for a larger loan.
Though significant, the money itself is just one part of the equation. Community-building and engagement plays a large role in connecting individuals to opportunities to have a hand in supporting the success of a small business.
Take for instance the profile of Elsie, a restaurateur who was forced to shutter her restaurant in 2014 after a significant rent increase meant she could no longer do business in her Harlem location. Like any good American comeback story, the entrepreneur is raising $10,000 to purchase a food truck she’ll call the Jerk Shack Caribbean Food Truck.
“After retiring from the NYC Department of Education, I decided to follow my heart and dreams by establishing Elsie’s Caribbean Café in November 2011,” Elsie writes. “However in September 2014, the building that housed Elsie’s was sold and there was a significant rent increase by the new owners. I was unfortunately forced to close my doors. I hope that with this Kiva loan, I will be able to continue serving quality food to my community at affordable prices.”
While the data on the impact of microlending varies, a 2013 study conducted by the Aspen Institute revealed that microloan recipients contribute to local economies through job creation, business sustainability and growth, and income generation.
As banks continue to restrict access to capital, sites like Kiva, Kickstarter and GoFundMe will continue to serve as disruptive options to traditional financing for small business owners.
“We are thrilled by our partnership with Intuit and its foundation,” said Jonny Price, senior director of Kiva. “Kiva borrowers have an 89 percent repayment rate, which means that once the loans are repaid, we can recycle the foundation’s funding to match additional loans, further maximizing the impact we make for small businesses.”
Image courtesy of Kiva
Sherrell Dorsey is a social impact storyteller, social entrepreneur and advocate for environmental, social and economic equity in underserved communities. Sherrell speaks and writes frequently on the topics of sustainability, technology, and digital inclusion.