0% Interest, Crowd-Funded Microloans ~ Q&A with Kiva Zip’s Amy Lambert

Screen Shot 2013-10-30 at 12.55.42 PM

Amy Lambert from Kiva Zip wants to help you get a microloan!

This week we spoke with Amy Lambert of Kiva Zip about the their highly successful crowd-funded, microloan program for small and medium-sized farmers.

If you’re a farmer looking for an interest-free microloan or know another farm that is, keep reading!  With an easy application process and manageable payback period, several farmers in the FarmsReach community have already taken advantage of this great opportunity!

FarmsReach: Let’s cut to the chase: What is Kiva Zip and why would a small or medium-size farm be interested in a microloan from your network versus anywhere else?

Amy Lambert: Kiva Zip aims to revolutionize small businesses’ access to capital throughout the United States. It’s a website that enables financially excluded and socially impactful entrepreneurs to access 0% interest small business loans. These loans are crowd-funded by hundreds of lenders from around the world, each loaning as little as $5 each. Kiva Zip bases lending decisions on a small business owners’ character and trustworthiness rather than on their collateral or credit score.  The crowd-funding aspect of Kiva Zip creates valuable connections between small businesses owners and Kiva Zip’s growing network of lenders.

FR: For those who aren’t familiar with the parent organization Kiva, could you explain how Kiva started, who’s in the network, and what it has accomplished to date?

AL: Kiva is a non-profit organization headquartered in San Francisco, with a mission to connect people through lending to alleviate poverty. Leveraging the internet and a worldwide network of microfinance institutions, Kiva lets individuals lend as little as $25 to help create opportunity around the world. Since Kiva was founded in 2005, Kiva lenders have lent over $488 million to over 1 million entrepreneurs in 73 countries, with a 99% repayment rate.

1445227FR: How did Kiva Zip come about? How is it different?  

AL: Kiva Zip was launched in 2011, and has since made loans to almost 400 businesses, in nearly every state in the country and in a wide variety of industries. Internationally, Kiva works with partner organizations that have their own lending programs in order to reach some of the most isolated regions of the world.

Kiva Zip enables anyone—organizations or individuals— to become Trustees and vouch for the people they know and trust in their community who are struggling to start or expand their small business. Trustees do not need to have their own lending programs, and funds are sent directly from Kiva to the borrowers. Once endorsed by a Trustee, entrepreneurs can be posted to Kiva Zip and begin getting their loan request crowdfunded by friends, neighbors and Kiva’s growing community of lenders.

Trustees are technical assistance providers, community groups or individuals committed to supporting social good through entrepreneurship and local job growth. There are more than 400 microlending institutions in the U.S. but there are millions of economic development organizations, churches, veterans groups, student groups, and businesses who mentor small business owners. Through Kiva Zip, each of these groups can now offer access to capital as part of their support.

FR: How many farmers have received microloans via Kiva Zip so far? Who are they?

AL: Kiva Zip has made 27 agriculture loans in the past 18 months, for businesses ranging from farmers, to ranchers, to cheese producers, to bee keepers.  Agriculture loans tend to fund quickly on Kiva Zip, averaging 1 to 2 months.

Some recent CA farmers who have received loans:

  • Sarah took out $5,000 to purchase an ice machine and scalder to grow Fiesta Farm.
  • Adam & Paula took out $5,000 to buy 30 piglets and feed to grow Mendocino Organics.
  • Ryan took out $5,000 to purchase a walk-in cooler to grow Blue House Farm.
  • Robert took out $5,000 to purchase wooden beehives to grow City Bees.
  • Alan took out $17,000 to make needed infrastructure improvements on Riverhill Farm.

FR: I’ve heard of crowd-funding before, like on Kickstarter. Am I responsible for finding the “crowd” to provide my loan funds? How does Kiva Zip’s network help?

AL: Kiva has a network of over 1 million lenders from all around the world, who lend not for financial return, but rather to help an entrepreneur chase after their dream. While the Kiva Zip lending community is very active, we also encourage borrowers to engage their communities and networks when fundraising, as they are the ones most likely to become customers, brand ambassadors, and promoters of their business. Not only that, but if a borrower invites a lender, Kiva Zip automatically matches that loan amount, helping borrowers fund twice as fast.

FR: What do the funds need to be used for?

AL: Loans can be used for any business purpose!  Interest-free funds can be used for supplies, inventory, equipment, infrastructure improvements, farmers market fees, hiring, advertising, etc.

Screen Shot 2013-10-30 at 1.24.11 PM

FR: How much can a small or medium size farm borrow? What are the payback terms? What if the harvest season isn’t year-round to make payments every month?

AL: First, loans are up to $5,000, and subsequent loans can be larger. Loan payback terms range from 10-24 months. Kiva Zip recognizes that agriculture is a cyclical industry, so farmers and startups are eligible for a 6-month grace period before repayments. 

FR: What are the prerequisites or requirements to apply? 

AL: Kiva Zip borrowers should have a strong business concept, have strong character, not be heavily indebted, and either have an annual income less than $100,000 or have a positive social impact with their business. Strict requirements for borrowers include a debt to income ratio of less than 30% and no current past due (late) debt.  And, borrowers should not currently be in bankruptcy or foreclosure.

FR: How do I apply? What is a trustee? How long does it take to post my loan request?

If interested, please contact me: Amy Lambert (amy.lambert@fellows.kiva.org), or inquire on the Kiva Zip home page.  If you are FarmsReach member, FarmsReach can serve as your Trustee so you’re able to fill out a loan application. A Trustee is an individual or organization who is able to write a public endorsement and speak to your character, business viability [and positive social impact].  The entire application process is online. A loan typically takes 2-3 weeks to get posted, and then 1-3 months to fully fund.

FR: How quickly do most farms get funded by the Kiva Zip network?

AL: Farms have typically funded very quickly on Kiva Zip! The average funding period for farming and agriculture loans is about one month.

FR: What percentage of farm borrowers in Kiva Zip get funded in full?

AL: About 98% of the small businesses on Kiva Zip have fully funded, a very high success rate.

FR: When and how would the loan money be dispersed to me?

AL: Once a loan is 100% funded, the loan is disbursed through Paypal. If a business does not have a Paypal account, a Kiva Zip representative will help them set one up during the application process.

FR: Do I need to provide any reports or paperwork after I get the loan?

AL: While no official reports and paperwork are required after you receive the loan, the lenders love updates on how you’ve used the loan, the latest developments with your business, and stories or pictures of you and your business!

FR: I’m ready! Where do I go next?

  1. Sign up at Kiva Zip.
  2. Contact FarmsReach to request our simple questionnaire to fill out, so we can endorse you. (The more endorsements the better, so also check out our partners CA FarmLink, who are also KivaZip Trustees.  See all Trustees.)
  3. Kiva Zip will then conduct the final financial review.

Thank you Amy for sharing this valuable information with our community!  If you have questions, get in touch with Amy: amy.lambert@fellows.kiva.org or FarmsReach.  To learn more about farm financing, check out our Business & Financial Planning Toolkit.

Leave a Reply

Your email address will not be published. Required fields are marked *

Post Navigation