By Natalie Anderson
SALISBURY – Instead of using a more expensive program like the Rowan IDEA Center, the city plans to move forward by investing in a national loan program designed to help women and minorities looking to start a small business .
KIVA is a San Francisco-based nonprofit loan program that provides interest-free, cost-free microcredit to women and minorities wishing to start a small business. KIVA partners with organizations to provide these women and minorities with affordable microloans. Salisbury City Council Member David Post and Pete Teague of Livingstone College gave council members a presentation on Tuesday on the progress they have made to start a KIVA program here in Salisbury.
In short, KIVA can be seen as “the first rung of the capital ladder,” Post said during his protest.
“The thing with KIVA is that it bridges the gap between people who can’t get credit,” Post said. “Their average borrower has an impossible credit score, typically less than 600.”
Post said this was a useful resource because a small business owner’s first lender is usually a family member or someone in the community they know.
In Post’s presentation, he said KIVA reports that nearly 70% of its borrowers across the country are women and 71% are minorities, with some overlap between the two. In addition, 60% of borrowers say they have already been turned down for loans and almost 60% of borrowers have a credit score below 650.
KIVA also reports that nearly 80% of borrowers can actually learn how to manage their debt and run their business, Post said.
Over the past six months, Post and Teague have formulated a model for Salisbury. Funding partners would include both the Town of Salisbury and the County of Rowan, and the “hub” would be the Self-Help Credit Union.
Self-Help Credit Union currently has an office inside First Legacy Federal Credit Union, located at 2146 Statesville Blvd.
“We are hopeful that Rowan County and the Town of Salisbury will provide the $ 25,000 to bring us to the KIVA platform,” Post said.
Post said the city and county budgets included per post funding for the IDEA Center, a partnership to boost local businesses and organize a business incubator, in recent years. KIVA would represent a much lower cost, he added.
“The cost to the city will be negligible, but I think the impact on the city could be tremendous,” Post said.
Mayor Karen Alexander agreed.
“From an investment perspective for the city, this is so much better than the numbers we were looking for for the IDEA Center, which would require a huge sum,” said Alexander. “And it’s a vehicle to help our most vulnerable small business owners. The people who really are are the startups.
Teague said Self-Help Credit Union has expressed interest in partnering with local government on this initiative.
“It’s not a traditional bank,” Teague said. “They have a more missionary approach to their work. Sure, they want to make a profit, but they’re really set up to help individuals and small businesses thrive. “
Teague said that Self-Help Credit Union’s involvement shifts the process further from where the program would otherwise be.
Another factor in the proper functioning of the program involves that a trustee provide the KIVA approval. Post said it would be a newly formed nonprofit that would include a board of directors of 10 to 12 local citizens “from across the community who know people who can attest to the character of borrowers.” The working name for this nonprofit group is “Piedmont Opportunity Funding,” he said.
The funders would donate to the nonprofit group, and then the nonprofit would channel the funds to KIVA. KIVA would then disburse the funds to the borrowers. Repaid loans can be used to repay lenders or kept in a revolving fund.
KIVA US requires one week of training. The next offered session starts on November 9, but it takes more time to prepare. So, Post said, KIVA is offering a special training session for Salisbury scheduled for late February or early March. Then the program should be launched next spring.
Once established, this would be the smallest KIVA site in the United States.
In the meantime, Post said the city may begin discussions with the county to raise the funds needed to launch the program.
Alexander added the benefit it would have for students at Livingstone College and Catawba College, both of which have entrepreneurship programs, which Teague agreed to.
“It would be a really good opportunity for the two four-year colleges for their business departments,” Teague said. “It (allows) schools to gain hands-on experience with students. “
Contact reporter Natalie Anderson at 704-797-4246.