You can now lend money to Philly businesses with Kiva Zip

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.

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.)

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.