Kiva Zip Information
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Kiva Zip Information

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Kiva Zip Information Kiva Zip Information Presentation Transcript

  • 1 US Trustee Introduction Spring, 2013
  • Kiva is a 501(c)(3) nonprofit organization, headquartered in San Francisco, with a mission to connect people through lending to alleviate poverty. Leveraging the Internet and a worldwide network of microfinance institutions, Kiva lets individuals lend as little as $25 to help create opportunity around the world. What is Kiva?
  • How does Kiva work? The borrower meets with the Field Partner and requests a loan. 1 The Field Partner disburses a loan to the borrower. 2 The Field Partner uploads the loan request to Kiva, it's reviewed by a team and then published on Kiva.org 3 Kiva lenders fund the loan request, and Kiva sends the funds to the Field Partner. 4 The borrower makes repayments and the Field Partner sends funds owed to Kiva. Kiva repays lenders. 5 The lenders can make another loan, donate to Kiva, or withdraw the money. 6
  • How does Kiva make money? • Tip from lenders • Grants • Donations Because of this Kiva does not need to charge interest or fees to borrowers or participating organizations
  • BUT WHAT ABOUT IN THE DEVELOPED WORLD? Incredibly successful in the developing world,
  • Specifically, what about in the United States?
  • 25 million microenterprises exist in the United States but only 18,000 microfinance loans were made in America in 20101 1http://fieldus.org/publications/2011CensusFacts.pdf
  • The statistic “Only 2% of potential U.S. microfinance customers are being served, compared to 17% in the developing world”2 2http://www.tsys.com/Downloads/upload/fall-ngenuity-journal-2012.pdf
  • Lack of small business lending And it’s been getting worse… Feb 2013 Small business loans3 2008 2011 Delta $1m or less $712b $607b -15% $100k or less $170b $140b -18% 3 http://www.sba.gov/sites/default/files/sbl_11study%20FINAL.pdf And loans less than $50k are virtually non-existent
  • MFIs (aka Field Partners) are too few and far between, and too traditional, in the United States
  • and Trustees
  • Lenders Entrepreneur
  • What do the loans look like? o 0% interest rate o First loan can be up to $5k; subsequent loans up to $50k o Up to 24 months repayment term o Grace periods available for startups and agricultural businesses o Repayments made in regular weekly or monthly installments o Disbursals and repayments made electronically via Paypal o Posted and ‘crowd-funded’ online
  • What are the criteria for the loans? Minimum requirements: • The borrower's debt-to-income ratio (DTI) must be less than 35% • The borrower cannot have past-due debt • The borrower cannot currently be in foreclosure or bankruptcy • The borrower's annual income must be less than $100,000 • The borrower must have both PayPal and Facebook accounts Character assessment: • Do you deeply trust that the borrower is the kind of person who will commit to repaying their loan? • Do they have a viable business or business plan? • Do you know what they will use the loan for and how it will impact their business? • Will this loan have a positive social impact? • Do they meet the minimum requirements for a Kiva Zip loan?
  • Lenders Trustees Entrepreneurs
  • Trustees • source Kiva Zip borrowers • review their business and personal finances • vouch for their character • publicly endorse them on the Kiva Zip website
  • Trustees Continued • have no financial liability for the loans, but their reputation is tied to the repayment rate of the borrowers they endorse. • can be either individuals or organizations.
  • Types of trustees Organizational • provide support, training, or assistance for the business • help the entrepreneur develop their business plan or provide ongoing support for existing business • allow the borrower to start with a 0% interest loan up to $5,000 that is paid back between 10 and 24 months. Individual • typically a close friend, mentor, or advisor • must have known the entrepreneur for over six months and have a good understanding of the business • allow the borrower to start with a 0% interest loan up to $2,500 that is paid back between 3 and 12 months
  • Types of trustees Continued... A few examples: • Community Development Corporations • Community Development Financial Institutions • Economic Development Corporations • Local Businesses • Neighborhood Associations • Nonprofits • Religious Groups • SCORE Advisors • Small Business Development Centers • Startup Incubators and Accelerators • Student Groups and College Professors • Etcetera
  • The ask • Kiva Zip is still in the early (Alpha) stage of development. • Because of this, there is no cost and minimal requirements to join • We do ask for a nominal time commitment for the following
  • A bit about who you are, why you are interested in Kiva Zip, and what due diligence you plan to conduct Trustee Profile
  • + an endorsement • The four questions the trustee answers about the borrower on the Kiva Zip website. • The endorsement builds the borrower’s credibility and helps lenders decide whether or not to make a loan.
  • The in-depth Kiva Zip loan process Trustee application Trustee endorsement Loan application Trustee review 1 2 3 4 Trustee fills out an application form, explaining why they want to be a trustee This is a one- time, online form, and takes only about 30 minutes to complete For every borrower they endorse, a trustee writes a ‘trustee endorsement’ An endorse- ment is only a few questions long and takes only about 10 minutes to complete When the trustee has submitted the endorsement, the borrower completes a ‘loan application’ This is a longer application form, and can take a couple of hours to fill out. Again, it is all online to make life easier! Once the loan application is submitted, the trustee gets a chance to re- view the loan The trustee can approve it if they are happy with it, or suggest changes if they prefer Finally, the Kiva Zip team will review the loan, before posting it to the website to begin fundraising From there, most loans take about 3-4 weeks to fully fund Kiva Zip team review 5
  • Why are borrowers so excited about Kiva Zip? • Ability to access capital • Zero interest or fees • Easy, online application • Flexible loan terms • Building of community
  • Why are lenders so excited about Kiva Zip? • Easy, one-click lending on the Kiva Zip website • Loans as small as $25, and lenders can still get their money back as borrowers repay • Cultivation of community, both on the other side of the globe and down the street
  • Why are trustees so excited about Kiva Zip? • Empower clients • Engage community • Promote through Kiva • Fundraise via impact
  • Why are we so excited about Kiva Zip? • Cultivation of community through ‘conversations’ • Radical expansion of access to capital • Development and leveraging of trust networks
  • Early Returns • Over 200 loans posted on the Kiva Zip website • Over 120 trustees in 35 states • About a third of loans to startups • 86% repayment rate • Building connections and community between and among our borrowers and our lenders
  • Theresa Wilson theresa.wilson@fellows.kiva.org (330) 814-5069 Join the Kiva Zip Community today!