The subject of crowdfunding has become a popular discussion, and a great funding opportunity for potential and growing entrepreneurs within the last five years. Business coach Vernard Alexander, of the Minority Networking Exchange, has been conducting workshops on the topic for two years encouraging small business owners and innovators to utilize the platform to gain funding for their businesses or ventures.
“In today’s economy you have to be creative as you think of ways to acquire capital,” he said. “With crowdfunding you not only fundraise, but it is a way to market your business and in some instances you establish or build your credit.”
Kiva Zip is one such crowdfunding source taking hold in the Pittsburgh area. As a pilot program launched by Kiva, it is considered the world’s first and largest micro-lending website. Emily Keebler, lead of Kiva City Pittsburgh, the local branch of Kiva Zip, describes it as a micro-lending website that empowers small businesses in Pittsburgh, and around the world, by connecting them to lenders who collectively fund loans and provide a network of support for each business. She pointed out that first time borrowers can apply for up to $5000 from lenders around the world who can give as little as $5. Once the loan is repaid, entrepreneurs can barrow $10,000 then up to $20,000.
Zip entered the Pittsburgh market early in the year placing it in the company with seven other cities. Additional cities are Detroit, Los Angeles, Little Rock, Newark, New Orleans, Richmond, and Washington, D.C. The program is also active in Kenya, Africa.
Involvement in Kiva Zip comes in three ways; lender, borrower and trustee. With seven out of 10 small business loan applications rejected by traditional financial institutions, Kiva Zip officials say their product makes it possible for lenders to send funds directly to entrepreneurs they support. Their three major goals are to help entrepreneurs access the financial services they need; to provide lower fees and interest rates to make borrowing affordable and to cultivate community between borrowers and lenders.
Keebler said Kiva City Pittsburgh and Kiva loans are offered at 0 percent interest with no fees and that borrower’s credit is not a factor. She explained that by lending on the Internet and tying loans to borrowers’ characters rather than their credit scores, Kiva Zip can provide entrepreneurs with the financial tools they need to succeed. Because Kiva Zip operates online and uses mobile payment technologies to move money, it’s able to slash the cost of making microfinance loans.
“These savings are passed along to borrowers,” she said. She also pointed out that by way of the Internet, lenders from all over the world are able to forge connections between lenders and borrowers, enabling communications including words of encouragement, updates from borrowers as they succeed and notes about how loans have helped businesses thrive.
“I was surprised that total strangers were willing and interested in investing in my dream,” said Tracy Carter, owner of Shear Delight Salon, a participant in Kiva City Pittsburgh. “Receiving encouraging messages from people that I didn’t know and having 96 donors from 6 countries, is amazing.” She used her money to purchase equipment and products and to fix plumbing problems in the building of her 2203 Centre Avenue salon. Her trustee was Urban Innovation 21.
Adam Wolfson, of Wolfpack Electronics, was also pleased with the process of Kiva. Currently repaying his first $5000 loan, he says it is highly probable he will take advantage of the $10,000 and $20,000 loans. Located at 6022 Penn Ave., in East Liberty, Wolfpack is an electronics buying, selling, reuse and recycling company that buys, sells, trades, repairs and recycles new and used consumer electronics. Wolfson said it took him about two months to complete the Kiva Zip process, including the 20 days to raise the funding. His trustee is the Beauty Shop.
Always seeking trustees, Keebler says Kiva City Pittsburgh has an interesting and strong group of supporters.
She defined trustees as technical assistance providers, community organizations, and individuals committed to supporting social good and job growth through entrepreneurship.
Enjoying the experience of providing business mentorship, Regina Wellons Johnson said being a trustee provides her an opportunity to help a small business owner. “I was involved in banking for a number of years, so I am use to working with and helping small businesses. I am familiar with their struggles and their joys.”
With approximately 20 functioning trustees and 15 possibilities, Urban Innovation 21, based in the Hill District, and the Christian Evangelistic Economic Development Organization, based in East Liberty, it assists a combined 11 entrepreneurs. Both organizations have a reputation that shadows the philosophy of Kiva, “When small businesses do well, we all do well.”
A native of Pittsburgh, Keebler previously served Pittsburgh area communities as the chief of staff for former Pittsburgh City Councilman Patrick Dowd and the manager of Financial Education Initiatives at NeighborWorks Western Pennsylvania. But she says her most interesting work experience was the year she spent teaching English in a fishing village in Japan.
With the view that Kiva Cities are a partnership of local community groups, microfinance organizations and Kiva Zip Trustees working together to connect Kiva lenders to entrepreneurs that they know and trust in their communities, Keebler says her goal now is to inform new and small businesses in the Pittsburgh area about Kiva Zip.
(To apply to be a Kiva Zip Pittsburgh borrower, lender or trustee Keebler can be contacted at emily.keebler@fellows.kiva.org.)
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