Meeting local needs and building economies from the bottom up is what microcredit is all about. Kiva brings the global community into the process by profiling viable potential borrowers on its website and accepting loans for those businesses from anyone with at least $25 to invest. Started five years ago in Uganda to get financing for small businesses like goat herding and a bike shop, the nonprofit organization is bringing its technology to Detroit in a joint venture to spur entrepreneurial growth in cities in the United States.
The soon-to-be-launched Thrive Detroit Street Newspaper qualified as one of Kiva Detroit’s first five approved borrowers. Their thousand-dollar loan was matched by a thousand-dollar grant from 1Matters, a Toledo non-profit that provided the initial financial backing for street newspapers in Toledo and Ann Arbor.
Detroit is the first U.S. city to benefit from the Kiva model, driving economic opportunity and poverty alleviation through micro-entrepreneurship. Kiva Detroit partners the online social investing organization Kiva, with the micro-lender ACCION USA and community supporters from Michigan Corps, to provide micro-loans in Detroit. ACCION provides risk assessment analysis and financial literacy programs and underwrites the loans. The Knight Foundation donated $250,000 in matching funds to speed up the cash infusion into the budding businesses.
According to Michigan Corps founder Anuja Jaitly, Detroit’s selection as the launch city was largely because “We already have a culture [here in Detroit] of helping one another.” Michigan Corps is a social network of local and global Michiganders committed to positive change in Michigan. They help identify local businesses and start-ups that need capital. Michigan Corps operates statewide and yearly launches several projects focused on education and entrepreneurship. Jaitly asserts Michigan Corps and Kiva will spread throughout Michigan as community organizations in other cities request collaboration.
The enthusiasm of Elizabeth Garlow, a recent graduate of Kalamazoo College, was another key component. As an AmeriCorps volunteer, she worked in ACCION’s Boston office. (ACCION is a worldwide micro-lender that has made more than 20,000 loans in the U.S.) When KIVA called and asked about forming a partnership in which their online site would drum up investors for ACCION borrowers in a U.S. city, Elizabeth jumped at the chance to bring that opportunity to Detroit.
Meanwhile, the John S. and James L. Knight Foundation, which supports projects in cities where the Knight Brothers owned newspapers, had also been talking with Kiva about advancing community engagement in the U.S. through Kiva. Trabian Shorters, an MSU grad born and raised in Pontiac, represented the Knight Foundation. He commented on those embarking on new enterprises: “The risk of failure is not the real failure. It’s leaving life’s dreams unfulfilled.”
Kiva co-founder and CEO, Matthew Flannery, explained that Kiva’s mission goes beyond matching investor micro-philanthropists with micro-borrowers, as financial inclusion leads to digital inclusion. Borrower profiles on the web augment sales and marketing, as well as financing.
“The newspaper [Thrive Detroit] can get new readers as well as lenders to drive their business,” said Flannery by way of example.
Other recipients of early Kiva Detroit loans include Nick Tobier, an artist who has worked with students at Detroit Community Schools in the Brightmoor neighborhood. They created a prototype of a bicycle trailer that the teenage students will hand-build in different sizes to haul cargo behind bikes. His team already has 10 orders. Tobier teaches at the University of Michigan School of Art and Design and at 826 Michigan, the tutoring and writing center on Liberty Street in Ann Arbor.
Rounding out this first working group of approved Kiva Detroit borrowers are Midtown resident Crystal Lecoy’s plans to open Detroit’s first vegan food truck; Emily Thornhill’s Homeslice Clothing, specializing in American-made organics; and Jeanett Griffin’s Life Style Management Concierge Services, offering business administration, personal assistance, and elder care.
Within three hours of having their businesses posted on Kiva.org, five enterprises were all fully funded at a total of the $11,450. Loans in U.S. cities average $7,000 and the loan maximum is $50,000. Unlike the five Kiva Detroit loans, some of these loans go to a linked group of borrowers. Borrowers repay their loans with interest ranging from 8.9% to 15.9%, based on how risky their venture is deemed.
Other emerging businesses were invited to showcase their enterprises at the Kiva Detroit press release launch event. Tamika Tyson, owner of the baking company I Like Cake, has been working seriously on her business for about two years but did not qualify for a loan this time. She has this advice for those starting businesses: “Be patient. It may not appear it is going to pay off. Get a mentor. I found someone, watched what they did and I mimicked what they did in the financial realm.” She will try again in six months to get a loan that will enable her to expand her inventory, do more advertising and, most importantly, buy her own edible image printer. Eventually she hopes to get financing to take the business out of her home and into a commercial kitchen, preferably one attached to a place where her family can live. She, her husband, and her sister run the business in their “spare time” while each holds down another full-time job and raises a family.
A coffee/tea shop had also unsuccessfully sought a Kiva loan. Though they needed financing, the owners were a little too well-off to qualify for a Kiva loan but did not have enough assets for a conventional loan. They participated in the ACCION-sponsored financial literacy seminars and received some guidance and suggestions from Michigan Corps. Eventually, they found family and friends willing to put up some of the money, and with that in hand, were able to secure a bank loan. Their boutique operation is housed in a hotel lobby and doing well.
For photos, buy the August issue of Groundcover from a street vendor.
| 
