Small loans can often make a big difference in whether or not a startup succeeds. Kiva.org, a San Francisco-based pioneer in micro-lending, last week introduced a new category of financing for entrepreneurs looking to launch green businesses worldwide. The Kiva Green Loans proved so popular that all 65 of its initial projects have already been funded. Kiva.org spokeswoman Krista Van Lewen says that 700 lenders purchased “shares” in the loans worth a total $31,000. She estimates that Kiva.org will post another 30 to 60 Green Loans per month over the next few months.
Kiva Green Loans allow small businesses implementing energy-efficient solutions to borrow money from its global community of investors. As with other types of loans, Kiva’s individual lenders can contribute $25 or more toward any given project; eligible endeavors include those which involve recycling, reusing materials, or reducing waste, pollution, or power consumption.
“Much of the developing world spends hours a day gathering wood and other materials for fuel, losing countless hours and often inadvertently damaging the environment,” Premal Shah, president of Kiva.org, said in a press release. “This can create a lack of access to electricity and heat, often called ‘energy poverty,’ that can have a big impact on quality of life. Microfinance can help provide solutions for energy poverty problems like these by, for example, funding the purchase of high-efficiency cookers and propane gas stoves. Green loans can not only save the borrowers money, but also help reduce our collective impact on the environment.”
Borrowers include people like Blanca Rosa in Bolivia, who aims to buy the parts needed to convert taxi engines to run on natural gas; Maylen Parisan in the Philippines, who wants a solar lantern that will help her cut fuel costs and extend her hours as a food vendor; and Andrew Kipsang in Kenya, who leases solar chargers (for electricity) to residents of his rural community. Other examples of Green Loans involve money to make or buy organic fertilizer; to purchase devices (solar panels, wind turbines, etc.) that generate renewable energy; to procure hybrid cars and bicycles; and to make “green” home improvements, such as installing high-efficiency cookers/low-propane gas stoves.
Kiva.org has an excellent track record in making small business loans. Since its founding in 2005, the nonprofit group has helped some 570,000 people loan more than $200 million to 537,000 entrepreneurs in 59 countries. “Kiva’s repayment rate thus far (for entrepreneurs) is 98 percent, and the start-up is raising $1 million every five days for small businesses,” wrote Leena Rao for TechCrunch. “Kiva CEO Premal Shah predicts that the organization will raise $1 billion in microloans by 2015. Expanding the power of this service to green businesses is no doubt a worthy cause.”