Microlending program focuses on character, rather than credit

Baking a pie – particularly his classic sweet potato pie – has become second nature to Johnathan Dye. Building his business has been a little bit more challenging.

Yet since 2011 the financial adviser turned entrepreneur has grown Mr. Dye’s Pies to the point that the brand has become bigger than his operation. While the growing recognition is encouraging, Dye realized he needed to crank out more pies in less time to keep up with the public demand. That required a substantial investment toward a new oven, but Dye was reluctant to take out a loan.

Yet less than two weeks, 162 people – mostly strangers – helped him make that investment.

They did so through Kiva Zip, an online platform that provides entrepreneurs an opportunity to fundraise 0% interest loans of up to $5,000 over a 60-day period. Local partners, or trustees, recommend and vouch for their credibility. Anyone can become a lender through as little as a $5 loan.

“It is so different than the typical lending process,” Dye said. “It is not based on credit scores but is based on your reputation and your trustworthiness. The whole thing is just refreshing.”

Kiva began its international microlending program in Uganda in 2005 and entered the United States in 2011. Milwaukee Mayor Tom Barrett and Wisconsin Women’s Business Initiative Corporation joined forces in encouraging Kiva to include Milwaukee as its 11th participating U.S. city.

“We want to build a full, strong economic development continuum of resources for entrepreneurs,” said Wendy Baumann, WWBIC’s president and CVO. “This is one thing that we all could say was not there.”

A grant from the Greater Milwaukee Foundation’s Walter and Oliver Stiemke Fund provided $25,000 to cover costs associated with Milwaukee’s launch on Feb. 17, 2015. Twenty-nine trustees, including WWBIC and the African American Chamber of Commerce, have vouched for area businesses.

Kiva City Milwaukee hopes to fund 200 entrepreneurs and reach $1 million in loans within its first three years. To date $178,600 has been loaned to 29 Milwaukee-area business owners.

While the number of businesses funded and high loan repayment rates are definite signs of success, Baumann also ultimately hopes that small business expansion and asset building in Milwaukee are outcomes.

“The beauty of the program is that it is sort of an evergreen program,” Baumann said. “Those matching dollars and loans paid back are ready to match another business.”

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