Beginning farmers know that one of the biggest obstacles we face is access to capital and credit as we build our farms. 

While there are a lot of commercial and governmental loan programs for farmers out there, many don’t have the flexibility or reach to assist those just starting their businesses.  We are lucky, however, to be seeing a growth in outside-the-mainstream resources available.  Kiva Zip is one such program.

Kiva?  That Sounds Familiar…

Yep!  You’ve probably heard of Kiva and the micro-lending work they do in Kenya, where applicants create online profile pages for themselves and their requests, and then anyone browsing the website can become a lender.  Like many such crowd-sourced micro-lending systems, the idea is to target those who would have trouble accessing credit, whether because of lack of formal documentation, remoteness, the small size of the loan, or even their gender. 

Kiva has taken off in Kenya, where not only has the use of the program exploded in recent years, but the repayment rate for loans is nearly 99%!  Unlike charitable organizations, Kiva aids via loans, not grants, so the lender gets the money back and can either withdraw it or choose a new borrower to fund.

So that’s happening in Kenya – but what about the US?

A Kiva Zip Success Story Sparrowbush Farm, in Hudson, NY Sparrowbush Farm operates a winter-farmshare program in Hudson, NY. Ashley, one of the farm’s co-farmers, applied for a Kiva Zip loan to help assist with the construction of a high tunnel to expand their business. The farm received a USDA grant for the project, but needs to provide the money up-front, to be reimbursed after the project is complete. The $5,000 Kiva loan will help them cover that cost. The project was endorsed by the nearby Hawthorne Valley Farm, a non-profit farm where Ashley had earlier worked and that could vouch for her as a trustee. The project reached its goal last week, with a total of 54 lenders. You can see more about the project here.

Well, Kiva has recently launched a US pilot program, called Kiva Zip.  As in their earlier work, the goals of this project are to help entrepreneurs who would otherwise have trouble finding credit; to do so at an extremely affordable rate (right now Kiva Zip borrowers pay 0% interest); and to strengthen the community that exists between borrowers and lenders.

Farmers (or other entrepreneurs, for that matter) can put together a profile for themselves and a project that would benefit from a loan.  As with the original Kiva program, potential lenders can browse and select the projects and people they want. 

One change made with the new program is the addition of the Trustee.  This is a third party (either a person or an organization) who endorse a loan request, placing their reputation on the line.  These tend to be people or organizations that know and can vouch for the borrower.  A lender can not only view the borrower’s profile, but also see the track record of the trustee to make sure their endorsements are  trustworthy.  Another new feature is the “Conversations” section, where lenders and borrowers can directly communicate with each other.

Kiva Zip isn’t for everyone, but for those whose projects and communities fit the bill, it’s a great addition to the beginning farmer’s financial repertoire.  You can learn more at the Kiva Zip website. 

For a list of other credit and capital resources, see the NYFC Credit and Capital directory.