April 2023

Northland Foundation and SBDC introduce free support for entrepreneurs to access micro-loans with Kiva

The Northland Foundation has partnered with Kiva, a non-profit working in the micro-loan space, to help more small businesses in our region successfully access capital to start, sustain, and grow. Kiva uses a unique online crowdfunding platform.

Loan amounts range from $1,000 - $15,000 at 0% interest with a repayment term of up to 3 years. Loan agreements and repayment terms are managed directly by Kiva.

"As a Kiva Trustee, we help answer entrepreneurs' questions and, for those who seek our support, connect them to a Northland SBDC consultant. The SBDC works with the borrower to complete a one-page business plan, Kiva online 'pitch', and promote their loan once it appears on Kiva’s web platform," explained Amanda Vuicich, Small Business Lender. "We may also be able to match funds to help them reach their loan goal amount."

The program helps entrepreneurs access a more sustainable funding option for growth than payday lenders or other predatory lending schemes.

Which borrowers might consider Kiva?

Kiva loans are a great fit for entrepreneurs that need between $1,000 and $15,000 to help start or grow their business. Because Kiva doesn’t consider credit history or collateral for loans, it can be a ideal for someone who may not qualify to have their loan request fully funded or qualify at all using traditional financing. Successful Kiva applicants must be willing to pitch their business idea to friends, family, and the public. Applicants should be comfortable using technology like PayPal, email, and social media.

Who is eligible for a Kiva loan?

Northland endorses Kiva loans for businesses located within our service area. There are no demographic or income requirements to access the Kiva loan program. Full eligibility requirements are available on our website.

What niche in the local financing landscape will Kiva help fill?

Northland’s Kiva program will help fill the gap of small loans under $15,000 for entrepreneurs from all walks of life who may not be able to access traditional financing. This program will help advance Northland Foundation’s work around equity and belonging by making capital available to more entrepreneurs who are Black, Indigenous, of Latin or Hispanic heritage, Asian, or other people of color, and other under-served entrepreneurs. Because Kiva loans don't require a strong credit history, collateral, or equity, it's also an option for anyone who may have those types of barriers to securing traditional loan sources.

Can a Kiva loan be used as part of a capital stack for a project larger than $15,000?

Absolutely! Kiva loans can be standalone financing for a project or be part of a larger funding package in partnership with traditional and nontraditional lenders.

What is the timeline from application to funding?

After pre-application work including a business plan and budget are completed with the help of Northland SBDC, the Kiva process takes between 45 to 60 days to complete all phases.

How can you refer clients to explore this opportunity?

As a first step, point clients to NorthlandKiva.org or share this flyer with more information. You can also contact Amanda or direct a potential borrower to contact her at amanda@northlandfdn.org and we can take it from there.

Northland Foundation participating in State of Minnesota SSBCI 2.0 Loan Guarantee Program

The Northland Foundation has been approved as a participant in the SSBCI 2.0 Minnesota Loan Guarantee Program (MNLGP), part of the State Small Business Credit Initiative to help lenders mitigate risk so they can increase capital to small businesses.

The MNLGP provides guarantees to enrolled lenders like the Northland Foundation for up to 80% of principal on loans to eligible businesses.

Funds are targeted to businesses with fewer than 500 employees. The maximum loan guarantee amount is $800,000. A fee of 0.25 percent of the guarantee amount is charged for each enrolled loan. The fee is waived for loans to qualified Socially and Economically Disadvantaged Individuals (SEDI)-Owned businesses and for loans with terms of less than one year.

To tap into the program through Northland, a borrower must be a northeast Minnesota small business using loan proceeds for an eligible business purpose. These include startup costs, working capital, equipment, inventory, the purchase, construction, or renovation of an eligible place of business (not for passive real estate investment purposes), and the purchase of any tangible or intangible assets except goodwill.

Lending decisions are made by the Northland Foundation based on available capital and other factors. Reach out to Amanda or Michael with questions or a potential project.