Kiva Rochester is poised to reach a milestone. The organization, which offers crowdfunded microloans to businesses in the city of Rochester, has awarded 167 loans totaling nearly $1 million since its inception in 2016.
Small, interest-free, commercial loans in Rochester were nonexistent until the city of Rochester partnered with San Francisco-based Kiva, an international nonprofit organization, to bring financial support to residents, officials say. The Kiva Rochester loans exist with a goal to fund small businesses in the city, in particular serving those who may not be able to qualify anywhere else.
Angela Rollins, Kiva Rochester’s coordinator of financial empowerment initiatives, points to the RAISE reportpublished last year. The government review of the current state of family caregiving identified the lack of access to capital for minority- and women-owned businesses as a significant barrier.
“Kiva is a really perfect solution to that because it’s a microloan: It’s really good for folks just starting out, but it can also be as high as $15,000, which is good for a slightly more mature business,” she says.
Getting a loan
People seeking a loan first need to find out what they are qualified to get. How much they might receive depends on several factors such as the size of their business and its current position—is it profitable or losing money? Applicants must be at least 18 years old, not in bankruptcy or foreclosure, and can’t be running a franchise. Among other requirements, the loan must be used for businesses that are legal on a state and federal level.
“We get all sorts of businesses—clothing, beauty supplies, service-based businesses, medical transportation, restaurants and startups,” Rollins says. “We get established businesses, basically, because Kiva is very open to what you can use the loan for. It’s accessible for a lot of businesses, so a lot of people use it.”
The second step in the Kiva loan process is proving creditworthiness by inviting friends and family to lend to you.
“Kiva wants to see that your grandma trusts you with $25 and that your brother does and that your friend does,” Rollins says. “If grandma won’t lend you $25, let’s work on your business a little more before you put your pitch in front of Kiva’s lenders.”
Borrowers first must line up 40 people to lend $25 each in a 15-day private fundraising period. Character references give an element of trust and confidence to larger investors in Kiva’s worldwide network that they’ll be getting their money back.
Then, a 30-day public fundraising period begins. Funds received from lenders move through PayPal so that a recipient can access the money seamlessly. Repayments, also through PayPal, begin one month after the loan is disbursed and are completed in one to three years.
Elizabeth Ingham, Kiva Rochester’s capital access manager, has been working to streamline the loan process. Since her start at Kiva (Ingham was hired as a part of Rochester Mayor Malik Evans’ Fuller Economic Empowerment Agenda), the individual loan amount average has increased from $5,700 to $8,000. So far, 20 loans have been given by Kiva Rochester in 2022, already hitting the organization’s yearly goal.
Kiva Rochester offers non-monetary assistance as well.
“The Kiva Rochester program itself focuses on these loans, but we also try to connect entrepreneurs to other resources that are available. The Financial Empowerment Center (offers) free one-on-one financial coaching (for) personal and business finances as a public service,” Ingham says.
She hosts workshops across Rochester in collaboration with partner agencies that work with small businesses. Ingham holds office hours each week at the Rochester Central Library. Kiva Rochester also partners with the Small Business Development Center at Brockport.
“We’re starting to look at some other places that (Ingham) can hold office hours to make her as accessible as possible to anyone who’s already thinking about entrepreneurship and maybe taking a couple of business classes or doing some readings,” Rollins says.
Lending on merit
The Rochester program draws on Kiva’s global network of small-business lenders. Essentially, anyone in the world can help fund a small business here, once the prerequisite of 40 people lending $25 each is met.
The difference between Kiva and a typical crowdfunding platform lies within its self-sustaining loans. With a platform like Kickstarter, an individual has more success funding their project through their community while accountability toward donors can be difficult to trace.
Kiva loans start out like a crowdfunding campaign, but after the first phase, lenders from around the world can chip in. Additionally, lenders may also become future customers.
“When they think of getting a small loan, they don’t think of also getting a community behind them, which I think is pretty cool,” Rollins says.
Small-time lenders don’t necessarily expect to get their money back in each scenario. Since the loans are zero interest, there isn’t any financial incentive to participate in a Kiva loan. However, if a business is struggling to pay its loans back, Kiva has resources that may assist them.
“It’s really about (the question): ‘How do we ensure the long-term success of this business?’ If you’re falling behind and you’re delinquent, that means something is wrong,” Ingham says.
Rollins manages the Rochester Financial Empowerment Center, which in addition to providing free one-on-one financial counseling to loan recipients maintains communication with those who are struggling.
“We have a wonderful intern who has been giving calls every single month to different types of businesses and delinquent borrowers, letting them know that we have this resource and then also letting them know that there are different kinds of workshops going on in the community, events going on in the community, places they can go to network and potentially meet business contacts, places that they can go to build up their skills and their marketing,” she says.
Making an impact
Since Kiva Rochester assists a small audience, challenges can have a large impact.
“A couple of years ago there was a bunch of arson (incidents) on Monroe Avenue, and one of our businesses was impacted, fortunately not by arson, but by the smoke damage, so they had to close down,” Rollins says.
Their lenders ended up helping them through the ordeal by giving additional assistance through a GoFundMe page. Keeping in communication with its lenders, the business was eventually able to repay its loan and received a larger one afterwards.
“It’s about tapping into that community and keeping in contact,” Rollins says. “That’s what we want to see.”
Kiva loans also can help business get launched. Erin and Brandon Opalich were able to open Aldaskeller Wine Co. with their loan, which also provided a cushion through unforeseen circumstances.
Erin Opalich is both satisfied with the process of getting the loan and grateful for it. The process of getting a license to sell wine in New York is long and arduous, so the time between the beginning of investment in the business and the ensuing revenue was drawn out.
“The state basically told us initially that they weren’t going to grant us a license to sell wine because they believed that we weren’t serving any kind of public convenience, that there wasn’t a demand for the kinds of wines we were selling,” Opalich says.
Without funding, the prospect of opening a wine company was looking grim.
“My husband actually lost his job at the beginning of the pandemic. He’s been a restaurant worker his entire life, so it was hard to get business loans at that point because he couldn’t show employment,” Opalich explains.
The couple received a loan from the Genesee Federal Credit Union, but it wasn’t enough to cover expenses. That’s when they applied for a Kiva loan.
“The Kiva loan was what made us able to make it through the whole way until we opened,” Opalich says. “So, it was really, really a lifesaver.”
The communal spirit of Kiva also helped the Opaliches in other ways to start their business.
“So many people wrote letters and signed a petition saying that they wanted us here,” Opalich says.
Aldaskellar Wine recently began operations, and many of its supporters showed up and contributed to a successful grand opening.
“It was a really great experience to just see Rochester show up and say, ‘We want you here’,” she says.
Alex Schneider is a Rochester Beacon intern and a student at Rochester Institute of Technology.
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Good stuff. Small business is the life-blood of any community. It’s much more desirable to have many small business then the mega businesses. Those mega businesses are great when they are properly managed. If they are not,….. it can take a community and small business down. Remember Kodak? I do,…..72,000 strong reduced to, a small business.