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March 6, 2021

Loan program for women, minority entrepreneurs expected to launch in spring

By Natalie Anderson
natalie.anderson@salisburypost.com

SALISBURY — For local women and minorities struggling to borrow funds to kickstart a small business, an additional resource is on the way.

KIVA, a national loan program that provides women and minorities zero-interest and zero-fee micro-loans, is expected to make its launch in Salisbury in March or April.

KIVA is a nonprofit loan program headquartered in San Francisco that partners with organizations to provide women and minorities with affordable micro-loans, ranging from $1,000 to $15,000. The program is essentially “the first rung of the capital ladder,” as many women and minorities don’t always qualify for loans via the traditional route. The ultimate goal, however, is for those borrowers to build enough capital to attain larger loans from the Small Business Administration or large financial institutions, for example.

Last week, the Self-Help Credit Union, which will serve as the capital access manager and “hub” for the program, officially signed on. Self-Help Credit Union has an office inside of First Legacy Federal Credit Union at 2146 Statesville Blvd. Training among the credit union and city staff will take place next month.

City Council member David Post and Pete Teague of Livingstone College are two locals key to bringing the platform to Salisbury with the assistance of Mayor Karen Alexander.

Though the program isn’t limited to just women and minorities, KIVA reports that 68% of its borrowers across the nation are women and 71% are minorities, with some overlap between those two. Additionally, 60% of the borrowers report being previously rejected for loans and nearly 60% of the borrowers have credit scores below 650. KIVA also reports a 78% repayment rate, and that about 80% of its borrowers learn how to manage debt and run their businesses.

While cities’ models for the platform vary, Salisbury’s funding partners would include city government, Rowan County government, local nonprofits and community members. Teague said the crowdfunding aspect of the program allows locals to take part in investing in their community, and there will be a matching fund option.

Self-Help Credit Union serves as a great fit since it’s not only a financial institution, but it’s also one that pursues a mission of helping underserved communities, Teague said. And some community members have already expressed interest in matching funds.

“For me, it’s just a natural addition to our mission of serving underserved communities, especially in the small business (sector),” said Claudie Johnson, the Charlotte city executive for Self-Help Credit Union. “Small minority- and woman-owned businesses have been left out. Obviously, the pandemic has exacerbated that.”

Johnson said at Self-Help some of its clients can’t qualify for business loans, which start at $25,000. Partnering with KIVA allows those clients to “have some skin in the game.”

He added that reaching a goal of 10-20 loans within the first year would be impactful for Salisbury.

Anne Lufkin, KIVA’s strategic partnerships manager and the city’s point-of-contact, said the average loan size for borrowers is about $7,000. It usually takes anywhere from six to 36 months to pay back, but because of the pandemic the program is allowing a three-month grace period for borrowers.

She said it takes an average of 20 days to raise funds, and there’s a “private fundraising period” of about 15 days since KIVA doesn’t require collateral. During that time, borrowers are asked to solicit funds from their network. Ultimately, fundraisers can be exclusively within the borrower’s community, or they can be funded by KIVA’s approximate 1.8 million lenders on the platform currently, Lufkin said.

Additionally, the program aims to assist those who are undocumented and formerly incarcerated.

“The power of that is that people are helping all across the globe,” Lufkin said. “We think this is a really powerful relationship. KIVA can be that stepping stone.”

Gemale Black, president of the Salisbury-Rowan NAACP, said KIVA is a great start at providing a “minority incubator” in the local community and bringing more minority business owners downtown. For many minority business owners, he said, they aren’t able to station themselves downtown due to the high cost of rental space.

The platform also provides an educational opportunity, Teague said. The business school at Livingstone, for example, provides a hands-on opportunity for students to help “real-life businesses” by providing technical assistance ranging from formulating business plans to providing accounting services.

Another factor in making the program work involves a trustee to provide the KIVA endorsement and identify funders. The city plans to do this by creating a board of 10-12 local citizens, ranging from those who can attest to the character of the borrowers and those who “know where to get the money,” Post said.

The creation of a board is still in the organizational stage.

Funders would donate to the nonprofit group, and the nonprofit would then funnel the funds to KIVA. KIVA would then disburse the funds to borrowers. Repaid loans can be used to repay lenders, or kept in a revolving fund.

Johnson said funders have the option to be specific in where they want their donations directed.

The city is responsible for a $20,000 yearly fee to use the program, which includes a discount KIVA gave the city since Salisbury is currently the smallest city to implement the program, Post said. The next most populated city in the program is York, Pennsylvania, which has about 44,000 residents.

The goal, however, is to broaden the program to become the Piedmont-area KIVA program. Post said the mayors of Concord, Kannapolis and Statesville will join a virtual call soon to discuss implementing a regional program.

Contact reporter Natalie Anderson at 704-797-4246.

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