The need for financial literacy is clear in both our personal lives and in business, but perhaps the highest stakes for personal financial adeptness is in micro-business. Build Institute defines a micro-business as a small company, usually made up of less than five employees. These ultra-small operations often rely on one or two key individuals to make decisions that affect every aspect of the business.
With that, micro-business entrepreneurs have to know their business and it’s financials inside and out. Unfortunately, too many of them are operating with poor or incomplete numbers, or even worse — operating in the dark.
It sounds incredible, but it is common for business owners to rely on an external bookkeeper or accounting professional during tax season, while lacking a personal understanding of the business’s financial health. Until a company is large enough to hire a chief financial officer, the owners should assume that role to the fullest.
Once an entrepreneur understands the finances as well as an accounting professional, the right time to inject working capital into the operation will become clear. Sometimes that cushion is needed when sales are taking off and there just isn’t enough inventory or staff to meet demand. Other times unexpected or unfortunate events (which are part of the process) may decrease sales, require costly legal help, or can otherwise rain on your money-making parade.
Regardless of the reason for a cushion, a business owner that’s comfortable diving into financial statements, unit economics, and projections will be prepared to make the difficult financial decisions that drive their business forward.
When the time comes to inject cash, entrepreneurs should consider all of their options. For some micro-business owners, Kiva is a great place to start. Kiva offers crowdfunded micro-loans of up to $10k with 0% interest, no fees, and reasonable repayment terms. The process for applying and borrowing through Kiva is far less complicated than dealing with traditional means of financing and the often prohibitive requirements that leave so many small businesses to fend for themselves.
Regardless if Kiva is the right fit for your business, the point is that micro-business entrepreneurs must be financially adept. They must know the health of their business in order to know when outside help is needed. When it is time for help, they have to evaluate every opportunity against the reality within their operation. The future of the business depends on it!
Build Institute is honored to be selected as a 2016 Neighborhood Builder from Bank of America. The recognition awards high-performing nonprofits that have made a significant impact in the community working in the bank’s priority funding areas of housing, jobs and hunger relief. The Neighborhood Builder program is a strategic investment that pairs leadership training with a $200,000 unrestricted grant over two years so leaders gain valuable skills while applying funding where it is most needed.
Build Institute has been recognized for its work in improving financial lives through entrepreneurship and its alignment to Bank of America’s work to address issues fundamental to economic mobility in order to build thriving communities
For Build Institute, the funding will be used to build up the organization’s technical assistance program for entrepreneurs, allow for the hiring of an on-staff small business advisor to offer one-on-one consulting, and provide funds for its micro-lending program.
“This is a game changer for Build Institute. To be recognized by Bank of America and be among such distinguished company is truly humbling,” said April Jones Boyle, Founder and Executive Director, Build Institute. “This support will help us reach more aspiring and experienced small business owners as we further our mission to make Detroit the global leader in equitable entrepreneurship.”
Since 2004, through Neighborhood Builders, Bank of America has helped nonprofits create greater impact in their communities and better prepare for the future by providing the tools and resources they need to develop stronger strategic plans, chart a succession plan, navigate through tough economic times, and enhance their funding opportunities. Since the program’s inception, Bank of America has invested more than $180 million in 900 nonprofit organizations across the country, providing leadership resources to nearly 2,000 nonprofit leaders, and the program has been recognized as the nation’s largest philanthropic investment in nonprofit leadership development.
Thank you Bank of America for your support of Build Institute and entrepreneurs in Detroit.
We’re delighted to announce that after four years of exciting growth and inspiring impact in and around Detroit, Kiva Zip is graduating out of beta! This means that our Kiva Zip loans will be moving to the main Kiva.org website. MergingKiva Zip into the main Kiva website will make it possible for us to expand Kiva’s impact in communities across metro Detroit, while continuing to grow our international network of borrowers and lenders.
There are several reasons for this change, but mainly, it is to streamline the application process. Currently Kiva Zip lenders have separate Kiva Zip and Kiva.org accounts. This can create confusion and hassle for these lenders. When Kiva Zip loans move to Kiva.org, accounts will be combined into one, and Kiva lenders will be able to seamlessly support entrepreneurs across the street, or the other side of the planet.
Additionally, one of the most dynamic aspects of Kiva is the 38,000 lending teams that allow lenders with shared interests to come together in support of Kiva’s community of entrepreneurs. To date, lenders have not been able to associate their Kiva Zip loans with lending teams, but after we merge this will become possible. We expect to see a surge of local lending teams develop among lenders who are excited about creating economic opportunities in and around Detroit.
If you are interested in learning more, contact the Kiva Detroit small business advisor, Razi Jafri, at firstname.lastname@example.org or visit Kiva Detroit on our website for more information.
Kiva Zip, a 0% interest, crowdfunded micro-loan program, has been in Detroit for 3 years and has had tremendous positive impact on small business owners. This program, now powered by Build Institute, fills a gap in Detroit for entrepreneurs trying to access capital to take their business to the next level, and creates community where individuals from Southeast Michigan and all over the world can have an active role in creating opportunity and rebuilding Detroit for as little as a $25 loan.
In only a few years there has been more $106,200 over 27 loans funded in Detroit and that number is growing every month. Build Institute has been the most active trustee endorsing over 12 loans totaling $48,350 and 100% repayment rate. Here are the stories of 3 Builders that used the Kiva Zip micro-loan platform and how it has impacted their business. For more info on applying, visit here.
I moved to Michigan from Wisconsin in 2008 for graduate school and was working at an environmental nonprofit when I established my business. I founded Motor City Soap Company in 2012 after my interest in sustainable living led me to attend a soapmaking workshop. I now work part time as an English language instructor in Southwest Detroit, a few blocks away from my new soap studio on Vernor in Hubbard Farms. As my business evolves so does my philosophy on the interconnectedness between work and community.
Motor City Soap Company makes handmade vegan soaps, lip balms and sugar scrubs. For years I had been aware of where my food came from and I grow nearly all of the vegetables I need for seven months of the year in a community garden. It was only natural to begin questioning the commercially manufactured products I was using on my body. My soaps are inspired by working people and are named after occupations like The Farmer, The Mechanic and The Nurse.
My name is Bryant Owens, and I am the Co-Founder and Chief Operating Officer of EverButter, LLC which is a family company that is owned by my wife and I and specializes in formulating, manufacturing, and selling all natural hair & body products, Natural Hair Coaching, and Hair Schooling Seminars. We focus on helping women build & strengthen relationships through hair by providing information about how to take care of their hair; to help them build the confidence they need to help and educate others about their natural hair.
Detroit Maid is a residential and commercial cleaning service for busy Detroiters. We provide vacancy cleaning, green cleaning, regular maintenance and more.
In 2012, I was commuting to Lansing daily for work while juggling family and social obligations. The last thing I wanted to do was clean. I finally decided to search for a cleaning service that met my needs in Detroit, to no avail. When I looked to suburban cleaners, merely 3-5 miles away, no one was willing to cross Eight Mile.
It was then that I realized I could put my cleaning skills and entrepreneurial spirit to use and create a business of my own—one that provides quality service while celebrating Detroit and Detroiters. Soon after, the first two team members were hired and we began to provide service to residential clients in Midtown and Downtown. We now have clients in every corner of the city.
2. How did you hear about Kiva? Why did you think the Kiva Zip loan was for you?
Caitlyn: I was first introduced to Kiva’s lending side by a friend years ago and became a lender in 2010. Then in 2013 I learned about Kiva Zip in a Build class, thanks to Delphia Simmons! I thought Kiva Zip was a great fit for me because I liked the idea of character based lending that was fueled by a supportive network of individuals. I needed funds to purchase carrier oils in bulk to bring down production costs and my first Kiva Zip loan gave me the chance to do this.
Bryant: I heard about Kiva Zip through my Build class, which was in the summer of 2014. One of the sessions was on funding and the different organizations that businesses can obtain funding through. As soon as I heard what it was, what type of businesses it was for, and how it worked, I knew I needed more information. I was intrigued by the Kiva Zip loan because it is a 0% interest loan, it is based on the company’s story, and it is a way to engage my own community for support in a non-threatening way. At the time, we had already launched our business and began bringing in sales, so our business fit the model of what Kiva was looking for.
We did a loan for $2000 for video and photo equipment that would allow us to build a YouTube channel and take professional photos of our products in house. This equipment would save us lots of time by not having to outsourcing our product photos and help us expand our reach by producing videos for YouTube.
Danielle: I became aware of Kiva Zip through the Build Institute’s Facebook page. I had built increased marketing into my business plan, but had not identified a funding source. When I learned about Kiva Zip it was perfect timing and just the right fit. I am now redeveloping my website and increasing outreach for our new social initiative, Clean for Good.
3. Had you been looking at other loans? What made your decision to go with Kiva instead of others?
Caitlyn: I began researching other options but Kiva Zip’s 0% interest made the decision quite easy!
Bryant: At the time of being introduced to Kiva Zip we had been in business for 7-8 months, so I investigated a few different funding types such as crowdfunding through Kickstarter or Indiegogo, SBA Loans, looking for a more traditional loans through banks. I knew we had not been in business long enough to be approved for a bank loan because they typically require business to be in business for 2 years or more, among other requirements. The requirement of the amount of time in business would have knocked us out.
4. What was your experience with the Kiva loan process?
Caitlyn: The Kiva Zip loan process was refreshingly smooth and supportive. From the staff I worked with on the ground in Detroit to the Kiva Zip personnel located at their headquarters, I felt informed every step of the way.
Bryant: The process was quite simple.After I was introduced to [the previous Kiva Zip fellow] we set up a phone call and discussed our business, what we were currently doing and what we wanted to achieve in the future. After that we completed the application and after about a week we were approved and were able to set up our internal funding process where we needed to get 7 people from our internal network to contribute to the loan before it went live to the world. After our loan was fully funded, the funds were in our Paypal account the next day! Amazing right! I thought so, too.
Danielle: The loan process was very easy to navigate and a great opportunity to generate support and visibility about family, friends and supporters.
5. What was it like to crowdfund your loan with people from all over the world?
Caitlyn: My experience crowdfunding through Kiva Zip was exhilarating because people were investing in something I created and believed in. I was also humbled by the fact that so many people were willing to take a risk and invest in my business. I still have customers to this day who started as lenders during my first campaign and that’s a great feeling.
Bryant: Very Interesting!! Watching the loan gradually get funded from people I didn’t know was amazing. It made us feel validated and in what we were doing, and very grateful for their support.
Danielle: It was so exciting to see each lender’s story. I felt amazed at how many people from across the U.S and abroad saw value in our work and wanted to support it. It made me want to accomplish even more.
6. What has it been like since your loan was fully funded? How did Kiva Zip impact your business?
Caitlyn: My first Kiva Zip loan was fully funded in December 2013 and it impacted my business in several ways. The campaign gave my business exposure and certainly boosted my online/social media presence. I was also connected with an amazing support network that showed genuine interest in my business’s growth, offering advice, encouragement and even ideas for new products. Lastly, the loan itself gave me the much needed breathing room to acquire raw materials and increase production rather than stress about cash flow, which can easily thwart creative output.
Bryant: We are blessed and amazed that our loan was funded within five days of opening worldwide. We are now able to save a tremendous amount of time and take our own professional product photos, so that is fantastic. We are in the process of gathering material together to shoot our product videos for each of our now 25 products. We can’t wait to release this project to the world. This wouldn’t be possible without the Kiva Zip loan, the Knight Foundation, Build Institute, and the support of our friends and family around the world.
Danielle: My loan was funded on July 21, 2015. Since then we have begun redeveloping the Detroit Maid website through Build web design partners Compass and are ramping up marketing efforts for our social initiative, Clean for Good. Additionally, many of our lenders have become clients, due to the increase in visibility.
7. Caitlyn is the first Detroit business to return for a second Kiva Zip loan of $5,000. When did you know you wanted to go back for another loan? What was that experience like? How did the second larger loan impact your business?
Caitlyn: I had such a positive experience with my first loan that I quickly took the opportunity to apply again when it was offered earlier this year. My business had a successful holiday season and I was eager to utilize this momentum to kick off my second campaign. The application process was just as smooth as the first but the campaign itself was more challenging. Kiva Zip had changed their process since my first experience in 2013 to require a minimum of private lenders from the borrower’s networks before the campaign went public. I still met my campaign goal and found that this requirement added a greater sense of ownership to the process. This second, larger loan is helping me grow responsibly and has alleviated some of the cash flow challenges that affect retail businesses during the summer months.
8. Any advice for future Kiva Zip borrowers?
Bryant: People may hear that some Build grad’s loans were funded extremely quickly, that we had tons of support, and that people just sit and wait on the Kiva website to invest and loan to businesses in Detroit. That may make them have a sense of confidence that all they have to do is put their profile up and the loan will be funded. It takes a lot of work, calling, Facebook messaging, texting, and emailing asking individuals to support. Make sure you are ready to work your butt off to reach the goal of a fully funded loan.
“Seeking community-based investment is exciting. With the right team in place, it can be relatively user-friendly and easy to understand, but it still involves asking people to take real financial risk with you. There will be some serious issues to address and information to provide.
You’re an entrepreneur, so you’re probably a doer and you like to get things moving, but it’s important to make sure you’re prepared before you start looking to the community for investment. Want to know if you’re ready? Start by answering these questions..”