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Thursday, Mar 28, 2024

Microloan Program to Aid Small Business Owners

A new microloan program may help San Fernando Valley area small business owners tap into a financing source, after they’ve been turned down by banks and other financial lenders. Kiva, a San Francisco-based nonprofit, provides microloans of up to $10,000 to businesses through crowd funding: money pooled from individual investors who collectively fund projects and businesses via the Internet. The nonprofit recently announced the Valley Economic Development Center in Sherman Oaks as its field partner for loan processing and underwriting for companies in the Los Angeles area. “It is very motivating to see how people believe in you and how they want to help you is great,” said Maribel Mena, owner of construction management firm American Veteran Inc. in Pacoima, which received $8,450 loan. Since the program launched in late June, thirteen Los Angeles area businesses, including five in the Valley have applied for loans, and 10 of those businesses had been fully funded as of July 3, officials with Kiva and the VEDC said. Los Angeles is the third U.S. city where Kiva has made the microloans available; the others are Detroit and New Orleans. Kiva was founded in 2005 and has made more than $300 million in loans in 62 countries, many in the Third World. The non-profit has a 98 percent repayment rate on the loans. While donations can be made from anywhere in the world, Kiva President Premal Shah said he hopes investors will become customers of the businesses they put money into. “It is connected capitalism,” Shah said. “You not only buy local, you can lend local.” The VEDC finds the businesses, takes the applications and then posts information about the businesses and their owners at the Kiva website to attract investors who put in money in $25 increments. The VEDC makes the loan directly to the business and is reimbursed by the donations minimizing the non-profit’s risk. Participation in the program will help the VEDC meet a goal of 900 microloans by 2015, said Angela Stanislawski, vice president of operations. The VEDC had been contacted by Kiva last year about becoming a partner for the Los Angeles program. “It is a small community of micro-financing in the U.S. and we all know each other,” Shah said. “By reputation, we know about them (VEDC).” In Los Angeles, the types of businesses seeking the microloans fall primarily into the retail and service sectors. Some patterns have emerged with the micro-loan program. For example, women-owned business are funded faster than male-owned businesses, and investors like putting their money toward business that sell a product they can touch or taste, Shah said. From its short involvement with Kiva, the VEDC has seen that businesses interested in the program don’t differ much from its other microloan applicants. “We’ve noticed that businesses having a storefront were funded sooner than home-based businesses,” Stanislawski said. Mena is among a handful of businesses from the San Fernando Valley participating in the Kiva program. She will use her loan for working capital and to pay the subcontractors who do tenant improvement and renovation projects. Mena, a U.S. Navy veteran with a service-connected injury, said she likes using other veterans or woman-owned businesses as her subcontractors. Donors to American Veteran Inc. are from all over the U.S. and as far away as the Czech Republic. “Random people online are reading my story,” Mena said. “I don’t know them, but they believe in me.” Roni Walden has military veterans in mind for her business, Yellow Ribbon Staffing Services in Sun Valley. Yellow Ribbon will help veterans find jobs and coordinate the documentation needed to continue their education at a college or university. Walden received a $5,000 loan through the Kiva program — a start but not enough for her to start serving clients. She said her next step is to find other funding sources, including federal grants. “It is a matter of participating in Veteran Affairs and getting the name out there until I secure more funding,” Walden said.

Mark Madler
Mark Madler
Mark R. Madler covers aviation & aerospace, manufacturing, technology, automotive & transportation, media & entertainment and the Antelope Valley. He joined the company in February 2006. Madler previously worked as a reporter for the Burbank Leader. Before that, he was a reporter for the City News Bureau of Chicago and several daily newspapers in the suburban Chicago area. He has a bachelor’s of science degree in journalism from the University of Illinois, Urbana-Champaign.

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