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City moves forward with loan program for women, minority business owners

By Natalie Anderson
natalie.anderson@salisburypost.com

SALISBURY — In lieu of utilizing a more expensive program like the Rowan IDEA Center, the city plans to move forward with investing in a national loan program designated to help women and minorities looking to kickstart a small business.

KIVA is a nonprofit loan program headquartered in San Francisco that provides zero-interest and zero-fee microloans to women and minorities aspiring to open a small business. KIVA partners with organizations to provide those women and minorities with affordable microloans. Salisbury City Council member David Post and Pete Teague of Livingstone College on Tuesday presented council members with a presentation on the progress they’ve made to begin a KIVA program here in Salisbury.

In short, KIVA can be thought of as “the first rung of the capital ladder,” Post said in his demonstration.

“The thing about KIVA is that it bridges the gap between people who can’t get credit,” Post said. “Their average borrower’s got a credit score that unborrowable, usually under 600.”

Post said it’s a helpful resource since a small business owner’s first lender for a business is usually from 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 nation are women and 71% are minorities, with some overlap between those two. Additionally, 60% of the borrowers report being previously rejected for loans and nearly 60% of the borrowers have credit scores below 650.

KIVA also reports that nearly 80% of borrowers can actually learn how to manage debt and run their businesses, Post said.

In the previous six months, Post and Teague have formulated a model for Salisbury. Funding partners would include both the city of Salisbury and Rowan County, and the “hub” would be Self-Help Credit Union.

Self-Help Credit Union currently has an office inside of First Legacy Federal Credit Union, located at 2146 Statesville Blvd.

“We’re hoping that Rowan County and the city of Salisbury will provide the $25,000 to get us onto the KIVA platform,” Post said.

Post said both the city and county budgets have included line-item funding for the IDEA Center, a partnership intended to boost local business and hold a business incubator, over the last few years. KIVA would be much less of a cost burden, he added.

“The cost to the city is going to be negligible, but I think the impact on the city could be terrific,” Post said.

Mayor Karen Alexander agreed.

“From an investment standpoint for the city, this is so much better than the numbers we were looking at for the IDEA Center, which would require such a huge amount,” Alexander said. “And this is a vehicle to help our most vulnerable small business owners. The people who are really are the startups.”

Teague said Self-Help Credit Union has expressed interest in partnering with local government on this initiative.

“They’re not a traditional bank,” Teague said. “They have more of a missional approach to their work. Sure, they want to make a profit, but they really are established to help individuals and small businesses to thrive.”

Teague said Self-Help Credit Union’s participation moves the process further along from where the program would be otherwise.

Another factor in making the program works involves a trustee to provide the KIVA endorsement. Post said that would be a newly created nonprofit that comprises a board of 10-12 local citizens “from around the community who know people who can attest to the character of the borrowers.” The tentative name for this nonprofit group is “Piedmont Opportunity Funding,” he said.

Funders would donate to the nonprofit group, and then the nonprofit would funnel the funds to KIVA. KIVA would then disburse the funds to borrowers. Repaid loans can be used to repay lenders, or kept in a revolving fund.

KIVA U.S. requires a week of training. The next session offered begins Nov. 9, but more time is needed to prepare. Thus, Post said, KIVA is offering a special training session for Salisbury scheduled for late February or early March. Then, the program should launch sometime next spring.

Once established, it would be KIVA’s smallest location in the U.S.

In the meantime, Post said the city could begin discussions with the county in gathering the funds to launch the program.

Alexander added the benefit it would have on students at both Livingstone College and Catawba College, which both have entrepreneurial programs, to which Teague agreed.

“This would be a good opportunity really for both four-year colleges for their business departments,” Teague said. “This (allows) schools to get hands-on experience with the students.”

Contact reporter Natalie Anderson at 704-797-4246.

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