Startup Junkie, a nonprofit that supports entrepreneurs and small businesses in Northwest Arkansas, is working with a microfinance company, Kiva, to offer crowd-sourced loans to underserved communities in the region.
With support from the Walton Family Foundation, Startup Junkie said it has started Kiva Northwest Arkansas to help entrepreneurs, small-business owners and farmers gain access to as much as $10,000. If they reside or have their businesses in Benton or Washington counties, loan applicants are also eligible for matching funds from the Waltons.
Martha Londagin, Startup Junkie's executive consultant, said the goal is not only to help disadvantaged borrowers, but also grow the region's lending community.
"There is a hole in the lending area," said Londagin, a former Springdale banker. "I would frequently have calls from people who needed just a little bit of a loan ... to start a small business or to buy a piece of equipment for their business, and as soon as they informed me sometimes that they had a low credit score or the fact that they had no collateral, they would not qualify for a bank loan."
Kiva, a nonprofit based in San Francisco, allows people to lend money to low-income entrepreneurs over the internet. The money is designated for people who have trouble securing traditional loans and offered with no interest and no fees, she said. Borrowers are not required to provide a credit score, collateral pledges or U.S. citizenship documentation.
"Our target consumers for the loans are persons seeking a loan from $1,000 to $10,000," Londagin said. "We are seeking this for those who have been historically disadvantaged."
Since Kiva was founded in 2005, more than $1.4 billion has been lent through the nonprofit, helping 3.4 million borrowers, according to its website. More than 1.6 million loans have been funded across the world.
The Northwest Arkansas Kiva hub is made possible through the technical assistance of Startup Junkie and funding from the Walton Family Foundation -- which pledged $100,000 in dollar-for-dollar matching funds to Kiva for approved requests that come from Washington and Benton Counties, making it easier for borrowers to pay off the loans.
Devin Howland, Fayetteville's director of economic vitality, said he is excited about the Kiva hub and what it offers for the region.
"We're particularly excited about this for one main reason," Howland said. "Economic inclusion is something that's wildly important to the city. And we think about those who need our help the most, in terms like 'economic inclusion' and 'equitable economic development,' they sound good. ... But what's hard is actually doing and putting something into action and really putting policy and funding where your principles are. And this program does that."
The lending process begins when a borrower applies for a loan with Startup Junkie's assistance, then the application goes through Kiva's underwriting and approval process. Once approved, the application is posted to Kiva for lenders to support, and there is a fundraising period where people can crowdfund the loan in payments of $25 or more. After the borrower repays the loan, the lenders are repaid by Kiva and can use those repayments to fund new loans, donate or withdraw the money.
The repayment rate is 97% and growing, Londagin said. Startup Junkie works with borrowers step-by-step, increasing the likelihood of Kiva approval, according to the Northwest Arkansas nonprofit. Lenders can find U.S. borrowers through Kiva without going through the hub.
The name "Kiva" is a Swahili word meaning "agreement" or "unity," commonly used in eastern African countries. The Pueblo and Hopi tribes also use the word to mean a community meeting hut.
"That's a perfect word for this program because this is a community program," Londagin said.
Business on 12/05/2019