With Amidst magazine, Kiva Iowa loan program funds its first entrepreneur

Early this summer, Jessica Pfohl Paisley of Dubuque was ready to launch her latest entrepreneurial adventure, Amidst magazine, a print and digital publication in which creative professionals throughout the Midwest could connect with one another.

There was just one problem. She needed $10,000 to cover printing costs for the first issue.

That isn’t unusual. Access to early capital is one of the biggest barriers to success for start-ups in Iowa.

Without access to that early funding, many Iowa entrepreneurs have to close their doors before their business even has a chance to begin.

“Our team has talked with hundreds of entrepreneurs and entrepreneurial support organizations across Iowa,” said Aaron Horn, executive director at NewBoCo,

“We’ve found that there’s a hidden step on the capital ladder that these businesses struggle to access before they’re eligible for SBA loans, banks, or private investors.”

For that reason, in 2021 NewBoCo partnered with Kiva to launch Kiva Iowa — and Paisley became its first borrower.

“Becoming a borrower on Kiva was very straightforward,” Paisley said. “I’m not going to say it was easy, but it was simple. Especially because you have someone walking you through the process.”

Based in San Francisco, Kiva is a global nonprofit microlending platform. It offers loans that are zero interest, zero fees and range from $1,000 to $15,000.

Lenders can support a Kiva microloan with an investment of as little as $25.

As the statewide hub for Kiva, NewBoCo facilitates the lending and due diligence process for Iowa-based borrowers on the Kiva platform and connects borrowers to other resources to grow their businesses.

NewBoCo was able to pilot this program in 2021 because of grant funding provided by the Iowa Economic Development Authority’s Entrepreneurial Investment Award program.

“This region needs more capital to create new opportunities for entrepreneurs, especially those who are financially excluded or historically cut off from accessing traditional means of capital,” said Kaitlin Byers, Kiva Iowa capital access manager.

“That’s why, as a former entrepreneur myself, I was drawn to take on a new role with NewBoCo as Capital Access Manager with Kiva Iowa.”

How does it work?

Rather than asking for collateral or running a traditional hard credit check, Kiva uses a “social underwriting” process to assess credit worthiness.

To be approved for fundraising, borrowers must provide financial and business information, a personal story and high-quality business photos.

Kiva reviewers then look at social factors, such as if a borrower has been endorsed by a local Trustee, before approving a loan for fundraising.

Once approved, the loan is posted on the Kiva website in a 15-day private fundraising period. During that time, the borrower must recruit a given number of lenders from their personal network to kick start their fundraising.

After reaching the required number of initial lenders, the loan graduates into a 30-day public fundraising period, during which it is publicly viewable by Kiva’s worldwide community of lenders.

This process makes Kiva an accessible option for entrepreneurs, particularly women, people of color and people with low to moderate income.

To level the economic playing field for entrepreneurs, Kiva requires that 80 percent of borrowers on its platform belong to these categories. NewBoCo expects that close to 100 percent of the borrowers its supports fall into these categories.

Paisley got connected to Kiva Iowa at EntreFEST — NewBoCo’s conference for entrepreneurs and innovators in the Midwest.

Byers worked to get Paisley approved on the Kiva platform, and provided advice as she went through the fundraising process.

“When there was a day or two left (in my fundraising period), someone finished the final $700,” Paisley said. “It was absolutely amazing.”

With a fully funded loan, Paisley had access to the funds she needed to print Amidst magazine’s first edition in September. It met with success, and the Amidst staff is planning the spring edition and working to grow their digital edition and online community for creatives.

Just the beginning

Paisley isn’t the only Iowa entrepreneur using Kiva Iowa.

As of October, two Iowa borrowers have been fully funded, and many more are beginning their fundraising process.

These entrepreneurs come from all across the state, and their businesses represent everything from model train manufacturing to beauty salons to farms.

Byers sees this as just the beginning of the program’s journey. She’s committed to growing Kiva Iowa throughout the entire state.

“Small businesses are the backbone of our communities,” she said.

“Our partnership with Kiva further confirms our dedication to supporting the dreams of entrepreneurs across the state of Iowa.”

Already a successful borrower on the platform, Paisley said she’s now interested in giving back by becoming a Kiva Iowa lender.

“I’m actually going through the platform looking for different loans to support myself,” Paisley said.

“It’s such an amazing, fulfilling thing to do. You can actually see firsthand the impact you’re having.”

To learn more about Kiva Iowa, go to newbo.co/kiva.