10,000 Reasons to Use Kiva to Fund Your Business
Funding your business is essential to setting yourself up for success--having enough cash on hand from the start will allow you to build your business to last. Often, when strapped for cash, business owners find themselves making short term decisions that will bring in money quickly but prevent them from building scalable systems. We refer to this as the small business mindset. While you may be a startup now, you won’t be forever, so it is important to make decisions that will serve your business in the long term.
One easy way to do this is by setting up a Kiva loan. In this guide, we’ll cover what Kiva is, how to set up your campaign, what to do once your campaign is funded, and the benefits of setting up a Kiva.
What is Kiva?
Kiva is a non-profit that connects entrepreneurs to their network of donors to fund loans. Once vetted by the Kiva team, your loan is posted on the Kiva site where microlenders from across the world can fund your loan. When your loan is completely funded (we’ve seen this happen in as quickly as 24 hours!), you will receive the funds to grow your business. The borrower (you) then pays back the loan. Kiva does not require a credit score and the loans are 0% interest, non-recourse making Kiva loans a great option when starting your business.
How to set up your Kiva account
Setting up your Kiva campaign is an easy process. To apply, you will need to be incorporated - LLC’s count! - to apply for a loan. Additionally, you will need to:
Go to Kiva.org
Click “Borrow” in the top right corner of the banner
Click “Continue Application”
Fill out the required information to complete your loan application
Once you submit your application, it goes through the underwriting and approval process.
There are two types of loans: partner loans and direct loans. When signing up for a Kiva, you will want to select a direct loan. Direct loans are approved through something called “social underwriting”--this means that loan approval is dependent on friends and family contributing to your loan (or by having a Kiva-approved trustee vouch for you)
If your loan is approved it moves into the loan disbursal period. In this period:
Your loan is posed on the Kiva website for support. Lenders can give to your fund in increments of $25 or more. This is where you will promote your loan.
Your loan gets fully funded--yay!
After your loan is fully funded, it will take about 3 to 7 days to have access to the funds.
My Kiva was funded! Now what?
Once your Kiva loan has been fully funded, it will take 3-7 days to have access to the funds. From there you can use your loan towards your business expenses. We have found that usually, businesses need $15,000 to go from an idea to launching a product on shelves. Your loan repayments start one month after receiving your funds. Kiva has a comprehensive guide on the loan repayment process. To make sure you are using your funds most effectively, you will need to account for your loan as you create your budget.
Benefits of Setting Up a Kiva
Starting any business requires investing some capital up front. To successfully move through Phase One: Launch and to build your business to last, you need to have access to cash from the start. Kiva is a great option for raising funds before you’ve had the opportunity to build your business credit. With a 0% interest rate and no credit check, Kiva loans are designed to lower the barriers to access to cash. Many of our Accelerator brands have had great success using Kiva.
Take Tyler Phillips, of Hummii plant-powered treats. Tyler set up a Kiva campaign to raise the up front capital for launching his vegan dessert business. With the help of 126 global lenders, Tyler received a $9,500 interest-free loan that helped him cover his production costs and purchase equipment that would not only help Hummii in the short run, but also allows him to create sustainable, scalable systems.
As evidenced by Hummii, creating a Kiva campaign is a great way to raise capital during Phase One: Launch. Having adequate funds on hand will allow you to make decisions that serve your business’ growth in the long run, instead of making short term decisions that will not sustain your business as you scale. In this article we covered how to set up a Kiva campaign, what to do once your loan is funded, and the benefits of setting up a Kiva campaign. So, what are you waiting for? Go out there and bring home the bacon (to borrow, of course)!