Kiva Detroit, MEDC Partner to Grow and Replicate Microlending Model
Kiva Detroit, Kiva’s first domestic microlending initiative—and the country’s first community-led microlending program—spent its first year focused on growing the social network of lenders and community volunteers on the ground actively recruiting small businesses in need of a loan. Now, it will partner with the Michigan Economic Development Corporation (MEDC) to build capacity and, if all goes according to plan, implement Kiva Detroit’s microlending/crowdfunding model in other Michigan cities.
“The MEDC is helping us build the community here with more focus on creating an infrastructure to make the process flow,” says Elizabeth Garlow, Director of Strategic Initiatives for Michigan Corps, a social network of local and global Michiganders focused on making a difference in their home state. (Kiva Detroit is a Michigan Corps initiative.) “We’re looking to bring Detroit to its full potential and replicate the model.”
Greg West, the MEDC’s community lending manager, says the state economic development agency wanted to fill a funding hole. “We recognized a clear gap in available institutional capital for small businesses and entrepreneurs,” he notes, saying that the need for launch capital was particularly great. After discussing its potential involvement in the program since last fall, the MEDC announced at last month’s Mackinac Policy Conference that it will allocate money to Michigan Corps to ramp up services and focus on the social lending aspect. “The goal is really to focus on bringing the community in.” West says that, ideally, two additional cities will be online using Detroit’s business model by the end of the MEDC’s two-year partnership with Michigan Corps.
Kiva’s microlending program in Detroit hinges on community involvement, both online and in person. Garlow says there are approximately 800 people in the Detroit network willing to lend money to small businesses in $25 increments for total loans of between $1,000 and $10,000. Nine businesses have received loans in the past year, with the most recent being a car detailing business, and Garlow says a few more are in the pipeline. The Knight Foundation doubles each loan through a 1:1 match.
Garlow says that, ultimately, her goal is to bring in 50 credible entrepreneurs sourced by the network and offer them support from the community, whether that’s loans, mentorship, or other involvement. “Sometimes the entrepreneurial ecosystem is tough to navigate, especially if you have a home-based business or a small business that wouldn’t fit at an incubator,” she adds, noting that entrepreneurs in the Kiva Detroit program have felt especially validated by having an entire community’s stamp of approval. “I think we have a lot to learn when it comes to what microloans can do to boost the confidence of an entrepreneur. It really creates positive momentum.”