by Tyler Hale
Startup Junkie and the Walton Family Foundation are launching a new microfinance hub in Northwest Arkansas that is designed to impact entrepreneurs and small business owners who require access to capital.
The organizations are partnering with Kiva, a San Francisco-based international nonprofit, to kickstart Kiva Northwest Arkansas. Founded in 2005, Kiva provides enables individual to crowdfund loans – enabling greater access to capital and financial services.
Through the new Kiva Northwest Arkansas hub, community members will be able sign up to lend money to local entrepreneurs. Loans can be made in increments of $25.
In an interview with Forbes manage, Kiva founder Premal Shah says that Kiva is one step in opening up access to capital for underserved entrepreneurs.
“There’s still a long way to go in terms of improving access to capital and we think what Kiva lenders are doing is they’re looking for that sweet spot between high impact things that help poor people make more money and sustainability in terms of repayment rates and in terms of something that can scale with markets,” he said.
According to Startup Junkie Executive Consultant Marth Londagin, the Kiva loans are available to individuals and businesses who might have difficulty obtaining a traditional loan. Securing a Kiva loan also does not require a credit score.
“Our entire community will have the opportunity to support the growth of new businesses that would not otherwise exist and put them on the path to success or lift up our existing businesses,” Londagin said. “These small community loan pledges take the place of traditional credit score requirements and personal or business collateral pledges. With Kiva, the borrower’s community vouches for them as being worthy of the Kiva loan program.”
Individuals who receive will not be required to pay interest, according to Startup Junkie officials. This differs from many Kiva loans where borrowers are required to pay interest to local field partners to manage expenses.
According to the company’s website, Kiva currently has six field partners in the United States. The company operates in 77 countries, with 3.4 million borrowers and 1. 8 million lenders. More than $1.38 billion has been loaned through Kiva, according to the company.
Borrowers who live in Washington or Benton counties in Northwest Arkansas will be able to benefit from matching funds from the Walton Family Foundation. The organization contributed $100,000 that will be used to match, dollar-for-dollar, grants from the two counties if a Kiva loan is approved.
In order to receive a loan through Kiva Northwest Arkansas, individuals apply for the loan with Startup Junkie’s assistance, and the loan goes through an underwriting and approval process with Kiva. After being approved, the loan is posted to Kiva for community lenders to support, and during the fundraising period, lenders can contribute in $25 increments.
Borrowers are required to repay the loans they receive. Repayment hovers around 97 percent, according to Kiva.