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Kiva Loans are crowdfunded microloans. They are a nonprofit fueled and supported by donations, loans and grants from users. They distribute the money to the likes of nonprofits, schools and business owners in developing countries, plus others. They provide social capital.
Are you an interested business owner? Here’s what you need to know to get a Kiva business loan. Remember, they don’t charge interest. And there are no fees.
What Is a Kiva Loan?
The company is based in San Francisco, and they lend money to American businesses that can’t get traditional financing. Kiva is similar to other types of crowdfunding. Individual lenders can give money starting at $25 dollars. A loan gets paid back, but potential lenders shouldn’t expect to get a 100% return.
Business owners can apply for loans, and the loan amount depends on several factors. There’s also a specific social underwriting process involved.
Here’s more from Salvador Briggman about how this social lending website works:
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How Does Kiva Microlending Work?
The Kiva team matches up lenders and borrowers. They work with Kiva lenders to support financially excluded individuals. Kiva borrowers are often business owners in emerging countries. They get loans through local Field Partners. Remember, you can get involved and endorse borrowers from your personal dashboard.
Kiva partners with more than 290 microfinance entities in 77 different locations. When the loan gets funded, these partners collect repayments. Plus, many of the loans are pre-disbursed. That means the borrower gets access quickly.
What Are the Advantages of a Kiva Borrower?
These loans in the US are direct loans. There’s no field partner involved in these Kiva funds.
Here are some other advantages for a small business.
- Businesses can hire employees. Kiva works to let owners delegate. That leaves entrepreneurs in underserved communities more time to grow their businesses.
- A business can expand a product line. Prospective lenders are interested in social enterprises.
- Businesses can pay lawyer’s fees and other services. Licenses and other agreements can eat into a cash flow.
- They can market. They can include part of a loan amount to professionally upgrade a website.
- Kiva loans can assist in purchasing new equipment, enabling borrowers to achieve a good return on their investment. By upgrading, a business can attract new customers through this type of public fundraising.
Who Qualifies for a Kiva Loan from Microfinance Institutions?
Get a loan through Kiva in more than 70 countries across five continents. A Kiva lender will consider the following criteria. Businesses must navigate several qualifications.
The Loan Must Be For Business Purposes
No personal loans are accepted. Plus, you must not be a franchise.
You Need To Be at Least 18 Years Old
And your business cannot be in bankruptcy or foreclosure.
You Should Have a Good Business Plan
As a borrower, it needs to be complete. To attract field partners, the fundraising goal should be clear.
You Should Be Socially Aware
Borrowers need to seek change. The lender network looks for positive impacts.
You Need to be Responsive
Kiva reaches out to applicants multiple times throughout the entire process. While there are no credit score requirements, you will be asked to respond to questions regarding the repayment process, as well as funding and approval.
What Is the Kiva Application Process?
This lending platform has specific qualifications and steps for securing a new loan, but it does not impose a minimum credit score requirement.
1. Gather Your Financial Info
A small business needs to provide tax returns, etc. They want official government documents.
2. You Need a Business Plan
Potential borrowers should already possess one. Remember to include a market analysis that outlines the areas where you offer services.
3. What’s The Loan Amount You Need?
These loans can reach up to $15,000 if you want to be fully funded. Borrowers are given a three-year repayment period, with repayment rates varying based on the loan amounts.
4. Describe Your Business Type
Kiva asks you to take the time to review this section. There are loan profile photos, business descriptions, and the purpose of the loan sections.
5. The Private Fundraising Period.
This stage focuses on increasing lender engagement through your network. Several intermediate steps are provided, along with some more info on obtaining a new Kiva loan.
Table: Steps to the Kiva Application Process
You can print this table and physically tick off the checklist column items as you complete each step or use an editing tool to mark them digitally.
| Step | Description | Checklist (✓) |
|---|---|---|
| 1. Gather Your Financial Info | Small businesses are required to provide official government documents such as tax returns. | |
| 2. You Need a Business Plan | Prepare a comprehensive business plan, inclusive of a market analysis detailing the regions where your services are provided. | |
| 3. Determine the Loan Amount | Loans can reach up to $15,000, with varying repayment rates based on the loan amount. Borrowers can avail of a repayment period up to three years. | |
| 4. Describe Your Business Type | This section requires detailed information including loan profile photos, business descriptions, and a clear articulation of the purpose of the loan. | |
| 5. The Private Fundraising Period | This step involves leveraging your network to engage more lenders, encompassing a few intermediate steps and additional details about securing a new loan through Kiva. |
Do You Need a PayPal Account to Get a Kiva Loan?
Unfortunately, no. Kiva maintains a strict policy of conducting all monetary transactions exclusively through PayPal. This is to ensure the security and reliability of the loan process for both lenders and borrowers.
To clarify, Kiva unequivocally does not accept the following payment methods:
- Dollar Bills or Coins: Transactions cannot be facilitated using physical currency.
- Checks: Traditional check payments are not accepted due to potential delays and security concerns.
- Wire Transfers: This method, often used for transferring large sums, is not supported on the Kiva platform.
- Money Orders: Kiva does not accept money orders as a valid form of payment owing to potential complications and delays in processing.
- Other Money Transferring Systems: In addition to the aforementioned methods, Kiva does not accept transactions made through other popular money-transferring platforms, including, but not limited to:
- Venmo
- Google Wallet
- Apple Pay
- Skrill
- Intuit
- Facebook Message payments
Ensure that your PayPal account is linked to your bank account to enable a seamless transfer of funds from PayPal to your bank.
Do You Have to Pay Back a Kiva Loan?
Monthly payments need to be made. You need to guarantee repayment. Those start one month after you get your money. If you’re having trouble, you can email the company. The Kiva trustee who vouched for you may be able to help.
Are Kiva Loans Legit?
Kiva has been operating for 15 years, and they have a solid reputation backed by impressive statistics. To date, 2.5 million people worldwide have received funds through them. However, it is important to note that there is a risk of losing your principal investment. The company does not guarantee repayments, nor is there any assurance of financial returns.
Lending or borrowing through Kiva involves risk. If you’re looking for more proof that Kiva is a legitimate organization. Consider the fact that they have a four-star rating on Charity Navigator. This website evaluates nonprofits for their sustainability, efficiency and stability.
Should You Use a Kiva Loan to Finance Your Business?
This is an excellent way for startups who have built up any business credit to get going. The interest rates are zero. One of the other amazing things that set it apart is the fact there’s no credit check. Plus, there are field partners that can help you raise capital. And they screen borrowers and collect repayments. Some of the other advantages include the fact you can qualify with bad credit or no credit.
Another factor is flexible financing. Once you get one of these loans, you can use the money for many of your business expenses. That can include marketing, inventory, payroll, new equipment, or almost anything else.
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