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June 15, 2009, 12:36 pm
Kiva, Microlending Site, Expands to New York
By Allen Salkin
Kiva Joe, of Queens, is seeking a loan through Kiva for his car-accessory business.
There are few New York dreams that do not require money to make them come true. Now the city’s dreamers have a new place to turn for funds — and they are turning.
The Web site Kiva.org has for the first four years of its existence channeled loans from Americans to needy entrepreneurs in the developing world. A truck driver in Brooklyn could lend $25 to help a tailor in Cambodia buy a new sewing machine. Kiva’s strategy allows regular people to “crowd-fund” a borrower’s request, each lender contributing a little bit to a larger loan.
But on June 10, the nonprofit organization announced that it was expanding its channeling of loans to include entrepreneurs in the United States, starting in a few cities, including New York.
Now that truck driver in Brooklyn can lend to a truck driver in Manhattan.
One of the new would-be borrowers on Kiva is Joe – borrowers can choose not to reveal their last names on the Web site – from Queens, who is requesting $2,125 to help expand his business of making car covers out of … well, he explains it on his Kiva loan request page: “Joe’s car accessory business is art in motion. He invented custom external car covers made from unique patterns of faux fur.”
As of June 15, Joe had received $1,100 in pledges toward his loan.
A few days before the expansion into the United States, Premal Shah, the president of Kiva, said he was not sure lenders would be eager to help out borrowers in America.
“Part of the secret sauce of Kiva is your $25 goes so far in south Sudan or Cambodia,” he said. “But then in the U.S., it doesn’t have the same level of impact.”
Early signs are that Mr. Shah need not have worried.
Another New York loan requester is Luis, the owner of a baked goods delivery business in Manhattan. In his request for a loan of $5,625, Luis explained that he had to buy insulation for a van to keep the goods cold in summer. (Here is a video of his explanation.)
Within two days of Luis’s request going online, his loan was completely financed. Of the dozens of lenders who pitched in, four are from Brooklyn. One is from Spain. None are from Manhattan.
Kiva is channeling its United States loans through two microfinance institutions, Opportunity Fund and Acción USA, which charge borrowers 8 to 15 percent interest. Those who lend money through Kiva get only their principal back; the microfinance institutions say they use the interest to cover their expenses.
Prospective borrowers must apply through those institutions. (Applications are here.)
The Kiva page for Segundo, a taxi driver from Queens who would like to borrow $3,000 for a new transmission, explains the nature of his vocation with a simplicity that borders on poetry: “Segundo says the key to his business is to have all licensing papers, follow transit norms and, most importantly, to avoid accidents.” (Here is his video.)
The requests for loans from New Yorkers come with a certain New York attitude, something not typically seen in Kiva loan requests from, say, Bangladeshi farmers.
Joe, for instance, describes his fake-fur designs as “loud.”
“People are forced to love it or hate it,” he explained on the site. “But at least it wakes them up.’”
