San Leandro Launches Kiva Zip Microlending Program to Support Small Businesses
On October 21, 2013, the San Leandro City Council approved the Kiva Zip loan program, adding San Leandro to a very small group of local governments nationwide using Kiva Zip to help entrepreneurs secure capital to grow their businesses. Kiva Zip is an innovative pilot program launched by Kiva, the world’s first and largest micro-lending website. Kiva, a non-profit organization based in San Francisco, became famous for enabling anyone with an internet connection to lend as little as $25 to alleviate poverty. Locally, Kiva Zip loans are currently being facilitated by trustees in the cities of Oakland, Berkeley and San Francisco. This innovative program provides the City’s Office of Business Development another financial incentive tool to attract and support businesses in San Leandro.
Kiva Zip is not like the typical “crowdfunding” organizations such as Kickstarter, GoFundMe or Crowdfunding.com where start-ups and entrepreneurs receive cash donations for their business ideas. Kiva Zip provides crowdfunded 0% interest capital loans up to $5,000 directly to borrowers. Below are scenarios of how some local businesses could potentially benefit from the Kiva Zip loan platform:
- Restaurants could use the loan funds to modernize their existing operations or to help fund interior renovations.
- Tech startups could purchase equipment related to Lit San Leandro connections or fund other startup costs.
- Small manufacturers could fund small materials and equipment purchases or startup costs.
The Office of Business Development will act as the City of San Leandro Trustee and will initially facilitate up to three loans up to $5,000 each. The program will be expanded if this pilot program proves to be successful. Trustees have no fiduciary duty to Kiva, the borrowers or the lenders and all funds will be distributed directly from Kiva to the borrower. The role of a trustee is to connect potential borrowers to the program, verify their business models, and provide support and resources after the loan is disbursed to help the small business succeed.
What a Kiva Zip loan looks like:
- For a business purpose
- Small loan amount (typically $5,000 or less)
- Short loan term (24 months or less)
- 0% interest
- Distributed and collected via PayPal
Specific criteria will be used to rank, evaluate and select projects for Kiva Zip loans. Applications will be accepted on a first-come, first-serve basis; however, priority will be given to those projects that meet the greatest number of the criteria. For more information, contact Justin Proffitt in the City of San Leandro’s Office of Business Development at (510) 577-3327 or by email at email@example.com.