Business Loan by Kiva Zip: Most of you people might be familiar with Kiva as the nonprofit providing microloans to refugees and other business owners. This company is from the U.S. with its headquarters in San Francisco. It provides no-interest loans to business owners who are no more into traditional types of financing.
Individuals of the general public community who want to see entrepreneurs succeed can fund loans for business owners in their communities or across international borders.
Before you apply for a Kiva loan — or make a loan through the organization — here’s a complete guide of what you need to know about how the platform works.
What is Kiva?
Kiva was started in 2005 to alleviate poverty in struggling communities around the globe. Since its enhancement, it has funded more than $1 billion in business loans throughout 82 countries. The institution relies on crowdfunded donations and grants and support from investors to fund loans.
Here’s how one can make a Business Loan with Kiva Zip:
Kiva is similar to other crowdfunding platforms. Any individual can give money online in increments of $25 or more. One can choose where their money goes, lending to people nearby or worldwide. Once the loan is in the repayment process, one can support a new Kiva loan for another borrower or withdraw your money. As a rescue Kiva funds loans, everyone gets paid back — through lenders don’t expect to recoup 100% of their investment.
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Here’s how Kiva Zip works in a gist:
When a business owner applies for a loan, the application goes through the underwriting and approval processes described below. Furthermore, the loan is then made into a post on Kiva Zip’s website. Moreover, it becomes available for crowdfunding and investments. There are notably two types of business loan with Kiva Zip business owners, which are as follows:
- Partner loans: This is the most common way business owners all around the globe receive Kiva Zip loans.Further, Kiva Zip field partners are non-for-profit organizations, schools, social activities, microfinance institutions, and communities where Kiva Zip business owners or borrowers are situated.
- Direct loans: Borrowers repay direct loans through PayPal payments without any follow-up from Kiva. Kiva does not include interest, but they are only available in the U.S. and through PayPal. They may be riskier than partner loans, where Field Partners follow up on loans and collect repayments.
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Securing a Business loan by Kiva Zip?
The main aim of Kiva Zip is to provide adequate financing to business owners who can not access fair and affordable sources of financing. Furthermore, typical Kiva Zip borrowers include farmers, artisans, shopkeepers, builders, restaurant owners and students.
To qualify as a borrower in the U.S., you must meet the following criteria:
- Be at least 18 years old.
- Currently, living in the U.S.
- Use the loan for business purposes.
- Run a business that is not engaged in the multi-level market, direct sales, or any illegal activity.
- One should not be in bankruptcy, under prior mortgage/lien or foreclosure.
If one meets these minimum requirements, then follow the following:
1. Apply online
Kiva Zip’s online loan application asks for personal and business financial information. It would ask the necessary reasons why an individual is applying for a loan. However, it does not require to submit any financial documents regarding business or meet any credit-based requirements that a traditional source bank might require. Further, an individual will also need to prepare a public profile, including a photo of themselves and their business.
On the application, one can request your loan amount and terms – up to $10,000 and three consecutive years to repay the business loan with Kiva Zip. However, the final ultimate decision is with Kiva.
2. Prove creditworthiness
Kiva Zip foremost relies on “social underwriting” when approving borrowers. It asks borrowers to gather people from their network to lend to them before their loan is public to demonstrate their social capital and creditworthiness. One would have 15 days to recruit 5 to 35 lenders, depending on the size of their loan.
After privately raising money from the network, the loan will be public on Kiva’s website for 30 days. Kiva recommends that business owners leverage their social networks and spread the word. The post will include the business story and high-quality photos on the profile where one can make their business look more compelling to investors.
4. Loan Repayment
Kiva will transfer the money to the relevant PayPal account after the approval of the loan. The first repayment would be due through PayPal after one month.
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