New Kiva Zip Program Lets Detroiters Lend Directly to Entrepreneurs

At the end of September, the microfinance initiative Kiva Detroit announced it was launching Kiva Zip to allow Detroiters to lend directly to small-business entrepreneurs using digital tools like PayPal. Similar to the Kickstarter model, any resident can nominate a local entrepreneur for community support as well as contribute directly to a crowd-funded, interest-free loan. Lenders will also have the opportunity to interact and share ideas with entrepreneurs though online forums.

“Kiva Zip mobilizes the Internet community to contribute in $25 increments,” 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 hoping the interaction between entrepreneurs and funders will lead to an exchange of mentorship.”

Garlow says the key difference between Kiva Zip’s peer-to-peer lending and Kickstarter is that the cash put up by citizen investors will be repaid. Unlike Kickstarter, there isn’t a time limit to reach a targeted fundraising goal. Most importantly, Garlow explains, Kiva Zip is a way to ramp up engagement. “It gives the citizens themselves the chance to nominate businesses. They will champion these businesses, which is a way to enhance momentum.”

The first loan nominee, Puzzle Piece Theatre, has already been announced. Delphia Simmons, who used a Kiva Detroit microloan for the production of a newspaper to benefit the homeless community, nominated the startup and gave the first $25 loan. Puzzle Piece was founded by D.B. Schroeder to “reframe theatrical events into storytelling that reimagines what’s possible.” Puzzle Piece will also offer community programming that Schroeder says is targeted toward lifelong Detroiters.

Schroeder moved to Detroit about a year ago from Chicago to be closer to his wife’s family. He had a theater company in Chicago that he says was an artistic success, but failed as a business. He wants to do things differently in Detroit and says working with Kiva and community lenders will help.

Puzzle Piece Theatre will use its funding to buy the rights to its first production set to open in February, rent a venue to stage the performances, and give the actors a “very modest” stipend for their work. Although Schroeder couldn’t go into many details yet, he says Puzzle Piece has teamed up with a big local charitable entity to purchase a building on the North End that the theater company will call home. The official announcement of that partnership will come in a few weeks.

Garlow hopes that the Puzzle Piece Theatre project will be the start of significant community engagement in the crowdfunded mincroloan process in Detroit, the first Kiva City in the U.S. “It’s an experimental platform in the alpha phase right now, but I hope that Michigan Corps will continue to be the platform to spur engagement across the state.”

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