Kiva City Los Angeles (LA), an initiative that enables anyone with access to the internet a chance to support small business owners, local economies, and local jobs in Los Angeles launched today.
The initiative also aims to expand the awareness and availability of microfinance opportunities among small business owners and aspiring owners in the Greater Los Angeles Area. Kiva City LA is a collaboration between the Mayor’s Office of Small Business; VEDC (Valley Economic Development Center), Kiva, and Visa Inc.
“Small businesses are the backbone of our local economy,” said Mayor Villaraigosa. “There is no shortage of passionate and successful small business owners in Los Angeles who, collectively, have the power to accelerate job growth and economic opportunity for all of us. We are thrilled to partner with Kiva and VEDC to help Angelenos bridge the lending gap and help small businesses thrive.”
Microloans accelerate job growth
Small dollar loans, or “microloans,” are essential to small businesses for to accelerating job growth and economic recovery in LA and across the nation. According to the U.S. Small Business Administration (SBA), small businesses create two out of every three new jobs, employ over half of private sector employees, and produce over half of the non-farm GDP. In LA alone, there are 325,000 small businesses employing nearly 2 million people, making LA the nation’s largest small business community.
“When small businesses do well, local and national economies do well—local jobs are created and communities are strengthened,” said Roberto Barragan, President and CEO of VEDC. “The small business owners and aspiring owners that we work with have all the elements of success—except access to capital and training to start or expand their businesses. Over the past three years VEDC has lent $25.8 million to 480 small and micro businesses, supporting the creation of 1,082 new jobs and 240 new businesses. VEDC’s partnership with Kiva City LA and the Mayor’s Office of Small Business will allow for the expansion of our efforts in Los Angeles as we strive to support small business and make economic dreams a reality.”
Microloans can be difficult to find because according to the SBA, the cost to banks for processing loans of $50,000 is nearly the same as processing a $1 million loan. Earlier this month Thomson Reuters/PayNet released a report showing that lending to small businesses fell for the fourth month in a row and is at the slowest annual growth rate in two years.
Kiva City LA fills the lending gap
Kiva City LA aims to fill the lending gap for small businesses through crowdfunding $1,000 to $10,000 loans. Lenders can visit kiva.org/losangeles and browse small business owners’ profiles and stories and choose those they want to support with a loan of $25 or more. Loans funded through Kiva have a 98% repayment rate, so the money you lend is likely to come back to you.
VEDC will use their extensive networks to identify qualified small businesses in the LA area that would benefit from a loan and then post their profiles on Kiva.org. Small businesses interested in beginning the application process can visit VEDC’s www.microloan.org. The Mayor’s Office of Small Business, through its BusinessSource Centers and counseling services around the City, will also identify potential borrowers and refer them to VEDC.
“A crowd of people lending to a business owner on Kiva.org gives each of us a chance to support thriving local economies, communities and jobs,” said Premal Shah, President of Kiva. “If the money stored in our wallets was given a new life for a short amount of time, as a loan to a small business owner, each of us could help to shape the course and success of the economy. A single loan, a single business or a single job can change the trajectory of families, communities, and cities.”
“Visa has a long-standing commitment to small business and financial inclusion. Kiva City LA brings those together by making it possible for small business owners to start or grow a business when they might not be able to otherwise,” said Douglas Michelman, Global Head of Corporate Relations for Visa Inc. “This can be the critical first step for business owners to create jobs and realize long-term financial success.”
Kiva City LA joins Kiva Cities Detroit and New Orleans and is part of the Kiva Visa partnership U.S. small businesses.
About Kiva City
Kiva City LA is part of the broader Kiva City program working to expand access to capital to small businesses in the U.S. Thanks to Visa’s strong interest in supporting small businesses, Kiva has now launched Kiva City Detroit, Kiva City New Orleans, and now Kiva City LA. Each Kiva City is a coalition of local leaders, community organizations, and financial partners working together to strengthen local economies, support small businesses, and expand financial access to underserved populations.
VEDC (Valley Economic Development Center) is the largest non-profit small business lender in metro Los Angeles and offers direct micro and small business loans as well as SBA 7(a) and SBA 504 loans. VEDC has a $20 million loan portfolio and almost $40 million under management and originates loans totaling more than $35 million annually to businesses locally and statewide. With seven locations throughout the Los Angeles area and San Francisco, VEDC has supported the small business owner for 35 years with the goal of creating and sustaining jobs and businesses in low to moderate income communities by providing high-quality economic development services. For more information visit vedc.org.
Kiva is a non-profit organization working to alleviate poverty by connecting people around the world through microlending. With as little as a $25 loan, anyone can help a borrower create new opportunities for themselves and their family. Together with more than 750,000 Kiva lenders and a worldwide network of microfinance institutions, Kiva has created economic opportunity for more than 800,000 borrowers. Since its inception in 2005, Kiva lenders have funded more than $325 million in loans with a 98.9% repayment rate. Visit www.kiva.org for more information.
About Visa Inc.
Visa is a global payments technology company that connects consumers, businesses, financial institutions and governments in more than 200 countries and territories to fast, secure and reliable digital currency. Underpinning digital currency is one of the world’s most advanced processing networks–VisaNet–that is capable of handling more than 20,000 transaction messages a second, with fraud protection for consumers and guaranteed payment for merchants. Visa is not a bank, and does not issue cards, extend credit or set rates and fees for consumers. Visa’s innovations, however, enable its financial institution customers to offer consumers more choices: Pay now with debit, ahead of time with prepaid or later with credit products. For more information, visit www.corporate.visa.com.
About the Mayor’s Office of Small Business
The Mayor’s Office of Small Business is integral to Mayor Antonio Villaraigosa’s economic development goals of strengthening our communities while advancing Los Angeles’s position as a world-class hub of creative and innovative business. The Office of Small Business is dedicated to connecting the LA small business community with the resources and opportunities they need to succeed. For more information visit losangelesworks.org.