ASI FCU Pilots New Microloan Model
NEW ORLEANS – ASI FCU is partnering with Good Work Network and Kiva.org to launch Kiva New Orleans, a first-of-its-kind program that enables locals in the community to support rebuilding the New Orleans economy by making microloans to local small businesses.
Kiva, which often goes by its domain name Kiva.org, is best known for its efforts to alleviate poverty in developing nations, where it has made a name for itself by lending to farmers. Internationally, Kiva has worked with microbusiness owners in 60 countries, including Peru, Ecuador, Bolivia and Azerbaijan. Kiva New Orleans will allow the people of New Orleans and their supporters to lend as little as $25 to local, small businesses. New Orleans borrowers through this initiative can be found at Kiva.org/neworleans.
The nonprofit group recently expanded its mission to include the United States. The Kiva City program launched in Detroit in June. It is being unveiled in New Orleans, the second city on its roll, today.
It works this way: “Social investors,” as they are called, go onto the nonprofit’s website and read the stories of the businesses. They can choose to read all the stories or drill down to only those from a certain region or industry, or only female or male business owners. Then, they can make a loan of as little as $25 or as much as $10,000 to the business owner of their choice. The lenders are repaid but do not collect a return on the investment.
Kiva has partnered with GoodWork Network, a nonprofit microbusiness development agency, and ASI Federal Credit Union locally. The former will assist businesses with advancing their operations to the point where, if it is determined they need a loan, they can be passed on to ASI, which has been given a $1.25 million lending capacity through Kiva.
ASI will make all lending decisions for the Kiva program. The credit union will put up the money, which then will be paid back by the social investors. ASI will continue to make traditional loans, but it will look for standout businesses to include in the Kiva program.
ASI was given permission initially to lend $150,000 to the first 15 businesses but will have a $50,000 monthly Kiva lending limit going forward. There is no minimum loan amount, but a maximum of $10,000. The businesses have three years to repay the loans at 15% interest.
One entrepreneur participating in the Kiva New Orleans microloan program is Danice Franklin, who founded the Creative Hands Day Care and Preschool Center in New Orleans. Her $10,000 microloan will enable her to purchase toys and equipment for the children she cares for and to support the expansion of her business.
Other Kiva New Orleans businesses include two construction companies, a skincare business, a gift shop/party supply store, a trucking agency, a solar energy business and an administrative support services business. Alongside its local partners, Kiva New Orleans’ organizers hope to support and learn from community leaders across the city over the coming months and years.