Supporting Beginning Farmers with Zero Interest Loans


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Kiva Zip is a non-profit Zero Interest loan program, funded entirely via online crowd-funding. Kiva Zip specifically targets financially-excluded small and/or new businesses that have difficulty securing traditional financing (usually too new, too small or too risky). This presentation - delivered at the 2013 Beginning Farmers Learning Network (Mar 8, 2013 - Albany NY) - describes some of the challenges for small and beginning farms to achieve a financially self-sustainable approach to farming, and also why zero-interest crowdfunded loans provide a viable and suitable means to grow their farms.

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Supporting Beginning Farmers with Zero Interest Loans

  1. 1. Supporting Beginning Farmers with Zero Interest LoansBeginning Farmers Leaning Network (BFLN) March 8 1
  2. 2. First, a little about 980K starter loans, 67 countries Crowdfunds $1mil in loans every 2.5 days 2
  3. 3. On Average,ALMOST HALFof the smallbusinesses Kiva fundsare in agriculture +food production
  4. 4. :What is it? 0% interest loan Funded entirely viaonline crowd-funding 4
  5. 5. :Who it’s for?Targets financially-excluded small and/or new businesses that have difficulty securing traditional financing(usually too new, too small or too risky) 5
  6. 6. In short..... “we design loans for smallbusinesses other lenders cannot fund.” 6
  7. 7. 3 quick reasons why ourloans suit beginner farmers 7
  8. 8. 1.“Beginning” 2.“Small”3.“Strong social ties” 8
  9. 9. 1) “Beginning”• new, unproven businesses• little or no track record• Zip designed as the "first rung of the credit ladder"• suits those with short credit histories - does not assess worthiness using FICO scores but competence and character instead 9
  10. 10. • Worked on farms but 1st- time entrepreneur • Bokashi aids “clean, non- stinky composting” as a compost accelerator and soil supplement. • Needed $5000 to make a profitable batch of 1200lbs • “With these purchases I can immediately turn a profit.This loan is theBOKASHI EVOLUTION lifeline of Bokashi as IOdorless compost accelerator, AZ have completely exacerbated my own funds.”
  11. 11. • Home based nursery selling 95 varieties of plants online • Lost $5,000 in plants in 2012 because didn’t have proper greenhouse & shading during difficult weather • Loan is to prevent plant loss and scale business • “By operating the business right, I will be able to increase sales and hire oneGAIL, THE POND PLANT GIRL full time and one part timeHome pond & artichoke farm. Visalia, CA employee; hank you for the opportunity to reach my dreams and goals.”
  12. 12. The Federal Reserve estimates> 80% small businesses use creditcards to fund some of their working capital 12
  13. 13. 2) “Too Small”• Beginner loans (Dairy cow or seeds or a freezer @$2000)• Often too small to be serviced profitably by traditional lending model• Small lenders is Kivas specialty• International loan size ave <$500• USA Zip ave <$5000• By using PayPal and partners (like you) in lieu of physical branch infrastructure, we can serve new and very small loans at zero cost 13
  14. 14. • Expanded garden - started keeping bees, growing organic herbs for restaurants in 2012 • Just 11 jars of honey in 2012 • “Need a little boost to help me get my first big season under way” • $2000 for new hivesLITTLE SPARROW FARM and quality seedsOrganic Micro-farm. Ballston Spa, NY (without using credit card debt)
  15. 15. 3) “Strong Social Ties” • Kiva Zip qualifies borrowers not by Credit Score • ...but by the willingness of established community-based organizations to vouch (“endorse”) borrowers • Community Ties and Human Trust are what count in the Kiva Zip model • Farming by its very nature is invested in the land, and rooted in the community - perfect for Zip 15
  16. 16. Examples of trustees now endorsing Examples of trustees now endorsing beginning farmers across the country beginning farmers across the country MAINE SHADYSIDE ORGANIC CALIFORNIA CATAPULT SEEDSPOT, NURSERY, FARMERS FARMLINK PGH AZ PALoyal to the Bokashi Fiesta Farm, BEEboy Honey, Churchview Healcrest Left field farm,Soil, Evolution, CA PA Farms, PA Urban Farm, ME AZ AZ PA
  17. 17. Trustees in NY endorsing small farms Trustees in NY endorsing small farms INSTITUTE FOR GREENHORNS, REBECCA VETERANS, NY HOCKADAY, NY SYRACUSE U Apitronics Blue Floral Beauty Mendocino (mobile House Greenhouses Little Sparrow Organicsarming apps) Farm Farm
  18. 18. 6 reasons why Kiva Zip can help you lowerbarriers for Beginning Borrowers Expand access to 0% interest loans ...To small and new farmers not otherwise qualified forconventional loans ...All loans are crowdfunded online from our lendingcommunity We also lower cost of lending further by using digitalplatforms (PayPal), no overheads = no fees or interest, onlypay back the principal Which also directly connects farmers with an online “SocialNetwork” of emotionally invested lenders These they can then turn into fans, customers and brandadvocates!
  19. 19. So yes, it’s a great vehicle. But the real fuel is you. 19
  20. 20. So yes, it’s a great vehicle. But the real fuel is you. In the Kiva Zip model of character-based lending, “Trustees” - organizations or individuals that work closely with small entrepreneurs - are absolutely crucial. Trustees are those entrusted to:- Identify eligible and deserving borrowers for 0% interest loan Trust = Character + Competence Publicly endorse them on the Kiva Zip website Support the borrower in their business (advice, mentorship, incubator space, networking)Trustees have no financial risk if a borrower they endorse does notrepay, but their reputation is tied to borrowers’ performance. 20
  21. 21. Trustees in NY endorsing small farms Trustees in NY endorsing small farms INSTITUTE FOR GREENHORNS, REBECCA VETERANS, NY HOCKADAY, NY SYRACUSE U YOU Apitronics Blue Floral Beauty A SMALL Mendocino (mobile House Greenhouses Little Sparrow FARMER Organicsarming apps) Farm Farm YOU KNOW
  23. 23. Kiva Zip needs more trustees. Join us.3 Things you can do right now to start helping farmers as atrustee 1. Think of 1 deserving borrower you know right now who could use a loan <$5000 - your pilot borrower 2. Think about why you TRUST in this farmer’s competence, and their character, and whether he/she is someone you’d vouch for - Y/N? • If Yes, email SULIN LAU, Kiva Zip New York 23
  24. 24. If you are or know a borrowerwho could use a Kiva Zip Loanwho could use a Kiva Zip LoanGet in touch with me!Rebecca Hockaday,Kiva Zip Trustee @ 24
  25. 25. One final story.....
  26. 26. By working together,we hope to have 100of these stories thistime next year. 26
  27. 27. Thank You! SULIN LAU“I know greatorganizations” Kiva Zip New York Rebecca Hockaday“I know greatlocal farmers” Trustee @ Albany
  28. 28. Appendix: back-up & reference slides 28
  29. 29. What’s in it for trustees? If you already work with financially excluded clients (unproven Empower startups, or low credit score entrepreneurs)... Clients Kiva Zip will give the clients you endorse access to 0% business loans they would otherwise not qualify for If you already do great work in your community that largely goes Promote unrecognized or unpromoted...what you do being a Kiva Zip trustee automatically allows you to promote your work (in your own words) to >1 mil socially-conscious Kiva lenders everywhere. Also participate in Kiva PR initiatives. If your organization’s potential funders care about tangible Increase impact (businesses helped, $$ generated, jobs created)... Impact, Kiva Zip helps you help more small businesses take off, faster. Help Endorsing a deserving borrower online takes 15min. Reducing Fundraise time and cost for raising capital means you can impact more.