Kiva Review

Pros and cons.

Pros

• Alternative eligibility requirements
• No-interest payments
• Fixed repayment schedule

Cons

• Slow funding timeline
• Limited loan amounts
• Loans based on crowdfunding

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Loan offerings through Kiva.

Kiva stands out by offering a unique platform where lenders can directly support small business owners and entrepreneurs through interest-free term loans. The organization facilitates loans starting at $25 and can go up to $15,000. This approach democratizes the lending process, allowing people from all corners of the globe to receive the financial support they need based on the strength of their business idea and their commitment to their community, rather than on traditional credit scores or collateral.

To initiate the process, applicants must post a compelling story about their business on Kiva’s platform, explaining how the loan will help their operation. From there, the crowdfunding aspect kicks in. The applicant’s personal network and the broader Kiva lender community contribute towards the loan in increments starting at $25. Once the loan is fully funded, the borrower begins repayment according to a fixed schedule agreed upon at the outset.

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Things to consider.

Slow funding time.

Kiva has a unique application and approval process, which ultimately results in a slower funding time compared to other options. Expect the entire process to last about two months from start to finish. Here’s what’s happening each step of the way:

The initial pre-qualification application takes 30 minutes to an hour to complete. From there, you’ll get a call from a Kiva team member who may have some additional questions about your business. Expect this call to take place within two weeks of filling out your application. 

Next, you’ll get a loan amount offer and will have 15 days to invite family and friends to contribute to your loan. Kiva calls this “social underwriting” and it’s used instead of a credit check. In other words, if there are people in your life who trust you enough to pay them back, Kiva feels comfortable opening your application to the broader community.  

After that, your loan will be listed on the Kiva website to fundraise from their base of 1.6 million individual lenders for up to 30 days. While these extra steps provide financing opportunities that may not otherwise exist for some small business owners, Kiva loans definitely don’t provide a fast path to funding.

Microloan amounts

While the loan amounts offered by Kiva might seem modest compared to traditional loan options, they play a critical role for small business owners who are either starting out or are in need of a financial push without the burden of high interest rates. Ranging from as little as $25 to up to $15,000, these microloans are particularly beneficial for entrepreneurs who need funding for specific, smaller-scale projects or to bridge cash flow gaps.

For businesses in early stages or those not qualifying for larger loans due to credit constraints or lack of collateral, Kiva’s model provides an essential lifeline. Additionally, the absence of interest on these loans means that business owners can focus on using the funds to grow their operations without the added pressure of accumulating debt. This approach empowers entrepreneurs to invest in their businesses more confidently and sustainably.

Completely fee-free.

One of the standout features of opting for a loan through Kiva is the total absence of fees. This contrasts sharply with many traditional and alternative lenders that might charge origination fees, service fees, or prepayment penalties. Your monthly payment amount on a loan through Kiva is solely based on your principal balance, split evenly across your repayment period (up to 36 months). Kiva will then determine how much you can reasonably afford to pay back, which dictates your loan amount.

Alternative requirements to qualify.

You won’t find the standard business loan requirements with Kiva, like time in business, annual revenue, and credit score. Instead, you’ll need to meet the following eligibility requirements, which are a little bit different than usual:

• You’re at least 18 years old.
• You and your business are both in the U.S.
• Loan funds may only be used for the business.
• Your business doesn’t operate in the following areas: multi-level marketing, direct sales, illegal activities, or financial investing (like stock trading).
• Financial requirements: no current foreclosures, bankruptcies, or liens.
• Social capital: must have at least a few friends or family contribute to your loan fund.

Monthly repayment schedule.

Kiva loans come with a fixed monthly payment plan so that it’s easy to budget your pay-off strategy. There’s no grace period and payments start one month after your loan funds are disbursed. You can make manual payments each month or set up automatic payments; either way, all payments must be made via PayPal.

Monthly payments are typically better suited for small businesses compared to daily or weekly payments required by some lenders. This is especially true if you’re a small business–you may not yet have consistent cash flow to be able to support more frequent payments. A monthly schedule gives you more time to grow your revenue and make your payments to Kiva.

Evaluation

Kiva is best for:

• Entrepreneurs seeking no-interest loans. Ideal for small business owners needing a financial boost without the concern of accruing interest, making it easier to grow their business without increasing their debt burden.
• Businesses with a strong community presence or support. Since Kiva relies on crowdfunding from the entrepreneur’s network and the global Kiva community, businesses that can mobilize their network effectively will find this platform especially beneficial.
• Start-ups and small businesses not qualifying for traditional loans. Due to its unique lending criteria focused on social capital rather than credit scores or financial history, Kiva offers a vital funding pathway for new or small businesses overlooked by conventional lenders.
• Projects with a clear, compelling story. The success of a loan application often hinges on the ability to share a compelling narrative about the business and how the funds will be used, making Kiva ideal for entrepreneurs who can articulate their vision and impact well.

Where Kiva might fall short:

Despite the many advantages of applying for a loan with Kiva, there are certain conditions where it might not be the ideal fit for some businesses. Understanding these limitations can help you make an informed decision:

• Limited funding for scaling businesses. For businesses looking to make a significant investment or scale quickly, the maximum loan amount of $15,000 might not suffice. Larger funding requirements would necessitate looking into alternative financing options.
• Not suited for urgent financial needs. Due to the crowdfunded nature and the detailed application process of Kiva loans, the time to funding can be lengthy, making it less suitable for businesses in immediate need of capital.
• Requirement of a personal network for initial funding. The necessity to have a portion of your loan funded by your personal network before it’s opened to the broader Kiva community can be a barrier for entrepreneurs with a limited personal network or those uncomfortable with soliciting funds from friends and family.
• Dependence on the strength of the business story. Success on Kiva somewhat hinges on the ability to convey a compelling story about your business and how the funding will help. This requirement could disadvantage businesses that have solid fundamentals but may not be as adept at storytelling.

The bottom line.

For businesses with compelling stories and a strong network, Kiva can provide a critical lifeline, facilitating growth and development in a financially sustainable manner. However, potential borrowers should carefully consider the platform’s limitations, particularly regarding funding speed and scale, to ensure it aligns with their immediate needs and long-term business goals. Looking for other financing options? Check your eligibility and get multiple financing offers for your small business in one place.

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