SALISBURY — After a month-long hiatus, the city’s partnership with the Kiva micro-loan program for women and minority-owned business owners is now in full steam with tweaks to how the model will operate in Salisbury.
Salisbury City Council has suspended the no-cost, no-interest micro-loan scheme to iron out communication and organizational issues. Kiva is a first step for women and minority entrepreneurs who are not eligible for loans through the traditional route to build capital and potentially obtain larger loans from financial institutions. Loans range from $1,000 to $15,000.
Alissa Redmond, owner of South Main Book Company, was among the first business owners in Salisbury to use the Kiva platform to seek funding for a down payment to buy her storefront. Redmond said part of the reason she decided to apply for a loan through Kiva was to better understand the process in hopes of helping other business owners navigate it. The challenges she faced centered on a lack of communication about the process and how the city’s matching funds work.
Council member David Post worked alongside Pete Teague of Livingstone College for over a year to bring the international program to Salisbury. The City of Salisbury signed up with Kiva last year and paid an annual fee of $20,000, which is $5,000 less than the normal amount charged, as Salisbury is one of the smaller participating cities. Additionally, the city has officially set aside $60,000 in the 2021-22 budget of CARES Act funding to support three years of matching funds for borrowers.
In the previous model, Self-Help Credit Union was the designated hub, responsible for hosting the point of contact for marketing and promoting Kiva and borrowers going public. Salisbury was the funder, with Post and Teague the only officially declared trustees. Trustees are responsible for supervising, assisting and approving the borrower.
From now on, the model will be based on administrators. Post and Teague are working to create the Salisbury Kiva, a not-for-profit organization to be formed where community members will serve as trustees and be guided by a 10-12 member council. Administrators will be responsible for promoting Kiva in the community, referring borrowers to the part-time “Kiva Koach,” assisting them with their applications, and endorsing and publicly advocating for their crowdfunding campaign.
With Kiva, borrowers must go through a private fundraising phase where they solicit funds from their own network before they are published on the Kiva platform. Then donations can be made by the public and the more than one million lenders across the country who are on the platform.
Post said five Salisbury residents had successfully accessed the Kiva platform, with three of them not getting the full amount of funding they needed in time. If borrowers cannot obtain the full amount of the loan, all money given by the lenders and managed funds are returned, and the borrower does not receive the loan. Post clarified that borrowers don’t lose money in the process.
But he showed two examples of Salisbury residents whose loans were honored. One needed $15,000 and received funds from 232 lenders across the country as well as the UK, Ghana and the Netherlands. Another needed $6,000 and received funding from 234 lenders across the country and abroad. Additionally, both have received funding from various “admin teams,” such as PayPal, Women Empowering Women, and Africa Common Interest. The two also received matching funds from Bank of America and Sue Hostetler of the Wrigley Family Foundation.
Post said these two examples show the power of Kiva’s international reach.
Post asked the city to cover up to $5,000 to pay for a part-time “Kiva Koach,” with that person responsible for spending up to 15 hours a month helping borrowers through the loan process. Eventually, Post said it would be ideal to achieve “certified trustee” status, which comes after establishing a track record of approving borrowers with a repayment rate above 90%. Certified status can grant borrowers expedited review and increased funding of $1,000. Additionally, the Certified Trustee endorsement could serve as proof of a legitimate and workable business plan, waiving a few steps in the process.
Post said the new model is beneficial in several ways: it’s private sector-driven, no annual funding is needed to cover Kiva’s costs, and the $20,000 that would have covered another year in the previous model can rather be assigned to the city’s share. matching funds. In addition, the city can choose to allocate its matching funds only to Salisbury borrowers.
“The goal is to get the community involved in this,” Post said. “It will work better.”
Board member Harry McLaughlin, who considered Kiva an option for his own business, said the biggest hurdle was a lack of communication and understanding of what the program entailed. Post told McLaughlin he was asked to become a director.
“But I think it’s important that we take a step back and make it better,” Mayor Karen Alexander said. “So we’re full steam ahead for next year and then we’ll do a review.”
Mayor Pro Tem Tamara Sheffield said the new program model made more sense.
“It wasn’t quite what we had planned, but now that we’ve realized what wasn’t working, I think you’ve done a great job of coming back with something that makes so much more sense to me” , Sheffield said. . “When we look at our budget for 2022-2023, I hope that all members of the board will want to continue to invest this money to achieve this. And I think it would be in our interest to also recommend in our budget planning process that we cover this (part-time position) to make sure everything is done right.
Board member Anthony Smith commended the “strengthened commitment to diversity, equity and inclusion, particularly in the area of economic development.”
“We want this development to be as diverse as possible,” Smith said.