You can now lend money to Philly businesses with Kiva Zip - Technical.ly Philly

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Nov. 20, 2014 10:47 am

You can now lend money to Philly businesses with Kiva Zip

The City of Philadelphia has taken an especially hands-on approach with the lending program, housing the local Kiva Zip program manager within the Commerce Department.

South Street's Armour is borrowing $5,000 on Kiva Zip.

(Photo courtesy of Armour)

With the help of the Barra Foundation, the City of Philadelphia is helping local businesses get startup capital. Not startup venture capital — just good old fashioned small business loans, but these come with zero percent interest.

The loans come through Kiva Zip, a crowdfunding platform where people lend money to a business and get paid back over the course of the loan term, which could be anywhere from six months to two years. It’s all done through PayPal. A platform from San Franciso-based nonprofit Kiva, Kiva Zip is a way for small businesses to get loans from somewhere other than a bank. It’s also a direct way to support the local economy.

Right now, you can fund three local businesses on Kiva Zip, including a South Street clothing store and a King of Prussia clothing line. So far, Kiva Zip Philadelphia has lent $52,000 to 13 businesses, according to Kiva Zip Philadelphia manager Alyssa Thomas. Sixty-nine percent of those loans went to businesses run by people of color, she said.

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Philadelphia is in the process of becoming a “Kiva City,” which means fundraising and organizing resources in order to make the Kiva model sustainable, Thomas said. Kiva Cities must have a full-time staffer (that’s Thomas) and a financial backer that will match initial loans that are made. One of those backers is the Wayne-based Barra Foundation, who was also behind a $110,000 grant to the Department of Making + Doing. The city will host a Kiva Zip Philadelphia launch event on Dec. 2. Other Kiva Cities include Detroit, New Orleans and Washington, D.C.

The City of Philadelphia has taken on an especially hands-on role by housing Thomas at its Commerce Department. In other Kiva Cities, the manager usually works out of a nonprofit partner organization, Thomas said. The way that Philly has taken ownership of the Kiva Zip program is progressive, she said.

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Through a spokeswoman, Deputy Mayor and Commerce Director Alan Greenberger said that Kiva Zip is “just one more way that we are working to bring more funding opportunities to business owners in Philadelphia.” (StartUp PHL is another.)

David Grimes, founder of Armour, is using Kiva Zip to finance his clothing store. (Photo by Instagram user @thebrookladelphian)

Instead of doing credit checks or asking for collateral, Kiva Zip works with “trustees” to vet businesses on the platform. Trustees are local community organizations that find businesses who could use Kiva Zip and who vouch for them. Local trustees include Washington Avenue makerspace NextFab, Center City arts coworking space CultureWorks and neighborhood community development corporations like the New Kensington CDC and Germantown United CDC.

Businesses that have used Kiva Zip in Philadelphia include food-related businesses, salons, landscaping companies and urban farms. Thomas said that often, when lenders get repaid, they keep their money in Kiva Zip and lend it elsewhere.

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Juliana Reyes

Juliana Reyes has been covering the Philadelphia tech scene since 2012. She's co-president of the Asian American Journalists Association Philadelphia chapter and a two-time Philadelphia News Award winner for "Community Reporting of the Year." The Bryn Mawr College grad lives in West Philly, likes her food spicy and wears jumpsuits often.

  • TartanSixNine

    Zero percent interest? Why would I do that? Are these charities?

    • KivaZipLender

      Kiva Zip loans target entrepreneurs who are not considered bankable by traditional standards, which in business terms typically means any business with less than 3 years of cash flow, a good amount of collateral/assets, and in industries that are higher risk – such as the food industry.

      A lot of businesses fail because they can’t access the capital necessary for growth, in turn hurting economies, especially on a micro scale. What Kiva Zip does, is it allows individuals to play a stake in the economic growth of their communities, and on a larger scale, their country.

      Your return on investment, by choosing to lend on Kiva Zip, is not financial but social and economic in terms of:

      – Job creation in your city

      – More products to choose from

      – You are able to support businesses with missions that you care about (i.e.: maybe you care about food access, and an urban farm is seeking a Kiva Zip loan)

      – Kiva Zip is a sustainable form of giving. If you lend $25 once, you get repaid, and can keep relending that $25.

      • TartanSixNine

        Is it tax deductible?

        • KivaZipLender

          It is not a donation, therefore not tax deductible. Since it is a loan, you are receiving your money back. You can choose to either relend it to another business owner or you can take your money back.
          If you wanted to do something that was tax deductible you could make a donation to Kiva Zip. These funds would not go to the small businesses, as a loan would, but would support the operational costs of the program.

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