The Wall Street Journal
By: Sarah E. Needham
October 22, 2010
Kiva, a nonprofit known for helping foreign entrepreneurs receive microloans, is working to broaden its reach to struggling small businesses along the U.S. Gulf Coast.
Earlier this week, the San Francisco-based group signed a partnership with Accion Texas-Louisiana, a microfinancing organization that provides loans to start-ups and existing businesses in Texas and Louisiana. It's the third such institution in the U.S. that Kiva has partnered with in the past year.
"Awareness of microfinance is really low here," says Premal Shah, president of Kiva. The organization's website features a directory of 400,000 entrepreneurs around the world seeking microloans, of which less than 1% are based in the U.S.
Microloans are small loans generally available for businesses that don't qualify for traditional loans or other investments. Loan amounts typically fall under $35,000, and as little as hundreds of dollars in some developing nations.
Visitors to Kiva.org can send money through the site to any of the entrepreneurs listed on it. Kiva then passes that money onto its microfinancing partners who work directly with those entrepreneurs. Loans to U.S. businesses average $7,000, include a low interest rate, and are valid for about 10 months, says Mr. Shah.
Bernard McGraw received a $4,000 microloan from Accion Texas-Louisiana earlier this month for his San Antonio, Texas, restaurant, Bernard's Creole Kitchen, which he launched in 2006. The eatery had outgrown its original location, and though Mr. McGraw found an affordable alternative, he didn't have enough money to hire employees and buy the equipment he needed to succeed in it, such as an industrial-size refrigerator.
Mr. McGraw says his bank refused to loan him the money he needed, suggesting he seek out microfunding instead. When he contacted Accion, he says a representative for the organization and another for Kiva walked him through the application process, which took about two hours to complete. When he received word that he was approved just a few days later, "I was floored," says Mr. McGraw. "I was not expecting that at all."
Kiva, which recently received a million-dollar grant from Visa Inc., has helped entrepreneurs around the globe obtain more than $150 million in microloans since its inception in 2005. It's one of several so-called "crowdfunding" sites that have cropped up in recent years to help entrepreneurs raise money, including KickStarter and IndieGoGo.
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