Kiva Zip: Peer-to-peer loan program beta-testing in Asheville at 0% interest during pilot

Jason Sandford

Jason Sandford is a reporter, writer, blogger and photographer interested in all things Asheville.

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Kiva.org brings a new peer-to-peer loan offering, Kiva Zip (beta) to Asheville in a pilot program that’s the first expansion beyond Kiva’s home base of San Francisco. Kiva Zip Asheville offers peer-to-peer loans of up to $5000 (at 0% interest during the pilot phase), with volunteer community “trustees” who vouch for borrowers.

Borrowers who have challenges in qualifying for traditional loans may see more benefit from Kiva Zip, according to Sara Day Evans, a local lender and trustee already involved in the program. Kiva.org makee small loans to community entrepreneurs in the developing world; Kiva Zip will provide small loans of up to $5K to select borrowers and entrepreneurs in the U.S., especially those seeking to start a business with social impact.
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Kiva Zip is a peer-to-peer organization, meaning loan recipients don’t necessarily work with banks, but can receive loans via community members who choose to be part of a lender program. Participants in the Kiva Zip Asheville pilot can either be lenders providing funds, or apply for loans themselves.

Since Kiva was founded in 2005, it has grown to 764,391 lenders and distributed $311 million in loans, with a 98.94% repayment rate.

From Kiva Zip:

The Kiva Zip pilot is intent on expanding financial access to borrowers who cannot otherwise be served by a bank or microfinance institution. This means Kiva Zip borrowers may have a different profile from Kiva.org. For example, in the U.S. it is becoming apparent that a lot of start-up businesses currently lack access to capital, and that these are prime candidates for Kiva Zip loans; whereas most of the U.S. businesses on Kiva.org are already established.

Use of new technologies

Through the use of technology, Kiva.org was the first-ever microlending website to allow any individual, with a computer and a credit card, to lend money to a low-income entrepreneur halfway around the world.

Kiva Zip is attempting to take the use of technology to the next level, such as mobile and electronic payments that enable the direct transfer of funds between lenders and borrowers. In the Kiva.org model, these payments are managed through Kiva’s microfinance partners. Kiva Zip still partners with organizations and individuals that work closely with borrowers (these are called “trustees” in the Kiva Zip model), but in Kiva Zip trustees never handle the loan funds.

Low cost loans

Low cost loans to borrowers is one of the main benefit of Kiva Zip being able to use new technologies to enable the direct transfer of funds. For the Kiva Zip pilot phase, Borrowers will be paying 0% interest rates. This differs from the Kiva.org model where borrowers do pay interest to the microfinance institutions in exchange for their administration of the loans, and a number of other important services that the MFI provides to borrowers (technical assistance, financial advice and training, etc.).

Kiva Zip website here.

Click here to see the Kiva Zip FAQ.