Business loan

Norwalk to launch small business loan program with ARPA funds


NORWALK – An interest-free small business loan program, funded with American Rescue Plan Act money, is scheduled to begin in Norwalk this spring.

The program, in partnership with the crowdfunding platform Kiva and the National League of Cities, will provide loans ranging from $ 1,000 to $ 15,000 to local small businesses.

The Common Council’s planning committee last week approved a three-year partnership with the loan provider. The project will be submitted to the Joint Council for approval before implementation can begin.

Kiva works similarly to GoFundMe in terms of crowdsourcing funds, but Kiva is a loan provider rather than a grant or donation system, said Sabrina Church, director of business development and tourism.

Small businesses upload their loan application along with a description of the business and their needs into a database, and lenders around the world can provide funds as low as $ 25, Church said. Once the business owner has paid off the loan, lenders can devote the funds to another effort or withdraw their money.

“Instead of giving money to a friend, there is someone in Australia who can donate money specifically for your loan,” Church said. “Kiva would then provide that business owner with zero percent interest.”

The loans are intended for small local businesses of the type that banks usually don’t choose for larger loans.

“It’s something that’s a very small amount that a bank doesn’t traditionally lend for because it’s not really worth their money or their time. They’re looking for those heavyweights who need $ 50,000 or more,” he said. Church said, “It’s your landscapers, your caterers, your limousine drivers, your basement soap maker. That sort of thing instead of these big conglomerates.”

With much of the substantive work completed as part of research on the program, Church said she expects the program to be up and running around February, pending approval.

To fund the program, Church suggested using a portion of the more than $ 39 million the city will receive, spread over 2021-2022, in ARPA funding. As the program helps support the city’s economy and local businesses, Church said the loan program falls under ARPA’s intended uses.

“Right now, where a lot of people are unemployed or unemployed and trying to start new businesses that they might not have thought of before, before COVID,” Church said. “I think that’s why this program is exploding as fast as it is. We are in a time where unemployment is a bit higher and we have more creative thinking about what people want to do. “

As the program works with small businesses, which are traditionally run by minorities and women, 81% of all lenders in Kiva are women-owned businesses and 65% are minority-owned, Church said.

Kiva started in 2016 and today has 45 hubs in the United States. Before Middletown began a partnership with Kiva this year, Rochester, NY, was the closest Kiva hub, Church said.

By signing with Kiva, Norwalk becomes a “hub” for Kiva, providing access to the loan database for residents and businesses in the city. To become a hub, the city will pay a fee of $ 65,000 for the three-year agreement.

As part of the deal, the city will provide a staff member to act as a Capital Access Manager to help Norwalkers build their loan profile on the Kiva database and connect small businesses with d other financial resources and aid in the region.

Once the staff member is trained, the hub can officially open and local businesses can start applying for funds.

A new staff member will not be added to the city’s operating budget for the loan program, said Jess Vonashek, head of economic and community development.

“He’s not someone we’re looking to add to the full-time squad,” said Vonashek. “This is someone we are looking to contract with over the three year period of the Kiva hub contract.”

For the capital access manager, the city will pay an additional $ 245,000 over the three-year period, for an annual salary of about $ 60,000, Church said.

The asset manager would likely start part-time and build up to a 40-hour work week once the program starts, Vonashek said.

“We’re talking about this toolkit for small businesses,” Vonashek said. “This is a huge opportunity for Norwalk which may even be enough money to pay deposits to open a storefront, which we look forward to opening small businesses in the urban core.”

[email protected]