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KIVA in US agricultural businesses. SUCCESS THUS FAR Farmers fund well Best repayments rates of any...
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Transcript of KIVA in US agricultural businesses. SUCCESS THUS FAR Farmers fund well Best repayments rates of any...
KIVA
in US agricultural businesses
SUCCESS THUS FAR
• Farmers fund well• Best repayments rates of any
industry within Kiva Zip• Kentucky has one of the top
repayment rates of any state on Kiva Zip
Kiva
• Started in 2005 as an international microfinance non-profit.
• Moved to domestic loans two years ago after persistent asks from our lender community, who mostly reside in the United States.
• Peer-to-peer lending
Kiva Zip
Small businesses create
jobs in the United States
2 out of 3
small businesses hired just
one additional employee
1 in 3
We could be at full employment ifEvery day
small business loan applications
are rejected by banks
8,000
Access to capital is consistently a
constraint to growth reported
by U.S. small businesses
Top 3
How do borrowers get money traditionally?
Reinserting relationships into our financial system
People are underbanked, financial literacy may be low or complexity in finances can be intimidating
Damaged credit
Collateral. How do you get started when you have nothing?
Cashflow is king but pre-revenue start ups have a chicken and egg problem: How can you get started (and demonstrate a quality cash flow) without that initial injection of money?
Reasons why businesses cannot access capital
What’s the vision?
A hundred years ago, banking was all about human relationships.
Now it is all about FICO scores, credit reports and balance sheets.
Kiva Zip retains the power of modern technology and data…
…But reinserts human relationships into today’s transactional financial systems.
How do borrowers get money traditionally?
KIVA’S FINANCING
• Social Underwriting– Self-reported credit– No collateral
• Flexible Repayment Terms• Social engagement with lenders• No transportation requirements
Social Underwriting – Our Big Innovation
Trustees• Social underwriting
entirely based on trustee endorsement
• Great start, limited growth
Private Fundraising Period• Second component
of social underwriting• Significant decrease
in due diligence of loans
• Unlocking viral lender growth
Make a Loan to Get a Loan• Experimenting with
new ways to increase the social underwriting components of the program
Wisdom of the crowd• We rely on Kiva Zip
lenders for due diligence
• Expirations “weed out” “bad loans”
Top three ways to fund quickly
1. Be a farmer2. Great photo3. Use your network
What’s the vision? Social capital
SupportersConnection
sCustomers
Feleciai had over 500 lenders on her
loan
Many of them sent her messages of
support
She has increased her sales by being on Kiva
Zip
Kiva Community in Kentucky
AGRICULTURE AND FARMING
By Industry
Loans by industry
Food production Agriculture
Services Retail
Restaurant / Caterers Clothing / Jewelry
Other
We <3 Food, Farm, and Artisan businesses.
Loan Amounts
$5,000 loan maximum on any industry outside of farming
$10,000 loan maximum for farmers, first time lenders
DIFFICULTY IN FINANCING AGRICULTURE
• Transaction costs are high – Population less dense– Transportation increases
• Repayment is dependent on external factors–Weather, drought– Seasonality
• Collateral
Loan Uses
Pay for legal fees
Purchase vehicles
Hire staff and help
Improve their technology
Upgrade their websites
Market and advertise
Purchase inventory
Invest in equipment
Expand product lines
Kentucky Loanshttps://zip.kiva.org/loans
https://zip.kiva.org/loans/15762
Who is qualified?
High quality is defined in three key areas:
1) FundabilityThe attractiveness of a borrower to lenders. The speed at which they fundraise. Food producers and farmers fundraise faster than any other industry.
2) Repayment RateTheir ability to repay their loans.
3) Social Impact
Process to borrow
1. Apply online2. No formal paper work required, all
self-reported numbers3. Endorsement by Trustee4. PFP (Private Fundraising Period) – 15
Days5. Public fundraising on the site – 45
Days
Questions?