SME Lender Offers 0% Interest

A new small business lender has entered the U.S. market, and this one offers zero percent interest.

Reports said late last week that Kiva, a nonprofit lender that focuses on microloans in an effort to support economic growth and combat poverty, presented its zero interest small business loan platform for the first time. Its business model allows investors to place as little as $25 towards a loan; there is no interest, and their money is returned once a loan has been repaid.

Kiva has been in operation for a few years, reports said, but has only just debuted its zero interest loan product. It did so at an event attended by PayPal CEO Daniel Schulman and former President Bill Clinton.

At the event, Cofounder Premal Shah highlighted the diversity of loan recipients through the company.

“In New York, there’s over 200 small businesses that have received loans from 12,000 people here,” he stated. “Of those businesses, 55 percent are run by women, 65 percent ethnic minorities and half have been in operation for less than one year.”

Reports said that Kiva requires small business loan applicants to first secure backing from their peers — friends and family — before they can be eligible to secure funding from other supporters.

[bctt tweet=”Kiva requires small business loan applicants to first secure backing from their peers.”]

Clinton spoke at the event, noting that microlending can see significant boosts from the crowdfunding model.

“The world needs positive identity,” he stated, “and a system of inclusive universal empowerment. That’s why Kiva is so important.”

According to Shah, about 95 percent of the businesses using the Kiva Zip program, which sees small business owners asking friends and family for a $25 loan so they can unlock access to other Kiva lenders, get their funding within 30 days. More than 90 percent, he added, repay their loans in full.