In a city where the lights are literally going out, it's good to know that there are some glimmers of hope. For Detroit, which filed for bankruptcy mid-July, and where nearly 40 percent of the city's streetlights remain dark, that glimmer is innovative programs, like Kiva Zip and Michigan Corps. Each is committed to creating jobs through funding small businesses and entrepreneurs who are not eligible for traditional small business loans.
For a city that was once the fourth largest in America - driving progress through the booming automobile industry, the recent abandonment of big business and the off-shore exodus of factory jobs has been devastating. While it felt like Detroit might be left alone in a pulverized economic aftermath, some aren't ready to throw in the towel just yet.
Kiva, along with organizations like Prosper and Lending Club, make it possible for a small business owner to obtain a loan without going through traditional funding sources. This is especially important for those entrepreneurs who may have trouble accessing credit due to the risky or new nature of the business, lack of collateral, or poor credit history.
Kiva Zip is a pilot program of the Kiva.org, the world's first and largest crowdfunding platform for social good. Since 2005, Kiva lenders have supported more than one million entrepreneurs in over 65 countries.
Kiva Zip is a vehicle for small businesses to obtain interest-free loans up to $5,000 that are crowd-funded, $25 at a time. It might seem similar to websites like Kickstarter or AngelList, but Kiva Zip is more laser-focused on helping grow small businesses that might be left out by the traditional funding bureaucracy.
Not only does Kiva Zip provide a lending source to entrepreneurs and businesses that are underserved by traditional lenders, it also gives other members of the community - from individuals to corporations - the opportunity to directly invest in their community and be part of the solution for struggling cities and neighborhoods. Organizations and individuals can do this as lenders or as Kiva Zip Trustees. Trustees endorse borrowers they know and trust in their communities and, once endorsed, borrowers can post their loan on Kiva Zip.
Kiva Zip's trustees include corporations, small business development groups and community organizations that work to help disabled veterans, the homeless and even parolees. Trustees provide assistance and support to entrepreneurs or businesses that they have endorsed for a Kiva Zip loan.
In June 2011, Kiva partnered with Detroit-based organization Michigan Corps to launch Kiva Detroit, a grassroots effort to channel capital and community support to Detroit's emerging small businesses through Kiva's platform. Michigan Corps continues to lead Kiva Detroit as part of the organization's mission to "empower Michigan citizens globally to use the web and more to lead change in our home state."
Michigan Corps has since worked closely with Kiva Zip to invite Detroiters, and those passionate about Detroit's revival, to invest directly in the launch and growth of dozens of community-minded small business entrepreneurs throughout the city. Recently, Michigan Corps extended the Kiva Detroit model to Flint, a city located about an hour from Detroit, to get citizens involved as champions of local business and invigorate the community.
"The expansion of Kiva in Flint extends a unique opportunity to nurture community pride and engage citizens in contributing to positive developments across our city," Flint Mayor Dayne Walling told mlive.com. "It's great to have a new way to bring our community together in support of small businesses in this exciting way."
Two of the first five loan recipients include Fannie Lucille, a fashion design company, and Max Beef, a restaurant located in a struggling area of Flint. Both companies were endorsed by Michigan Corps and plan to use their microloans to take their businesses to the next level and become part of Flint's economic recovery.
Pictured: (L) Kiva Zip Borrower Kala Wilburn (R) Kiva Zip Borrower Issa of Max Beef
Back in the fading streets of Detroit, several businesses have already received a lifeline from funding through Kiva Zip. Puzzle Piece Theater, an experimental community theatre, was the first Detroit recipient of a $5,000 crowd-funded loan from Kiva Zip. And it's these kinds of reciprocal community connections that Kiva Zip and Michigan Corps hope will make a lasting difference as Detroit struggles to regain solid footing after years of economic downturn.
Pictured: Puzzle Piece Theater
Not only do crowd-funded microloans help entrepreneurs and business owners, but there are positive side effects for local communities in the form of job creation and economic stimulation. And not only do they put their money where their mouth is, but Kiva Zip loan recipients have an 85.9 percent repayment rate - proof that their system is working.
While Kiva Zip has the power to initiate change, create jobs and make a difference for struggling former giants of the American Dream like Detroit, the best part about the program is that everyone can participate. If you have a passion for energizing local communities and want to learn how you can endorse a business or help by loaning $25 to your favorite Kiva Zip entrepreneur, go to zip.kiva.org.
Pictured: Downtown Detroit
Elli Bishop is a writer for BusinessBee, a site dedicated to providing readers with the latest business news, resources, articles, and business internet solutions.