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Crowdfunding Microloans for Social Good

Premal Shah is being honored as a Champion of Change for his accomplishments as a crowdfunding pioneer.

Premal Shah

Premal Shah is being honored as a Champion of Change for his accomplishments as a crowdfunding pioneer.

How can we leverage crowdfunding to create abundance where there is scarcity? How do we give everyone a way to consistently be their best selves, including maximizing their potential to do good for others? The capacity and will is there, we see it when our country and the world comes together to assist after major disasters. How can that hope, compassion, and connection—that fundamental understanding that we are a human family—continue to flow long after disasters, and help to build a sustainable economic recovery for all of us?

Those are some of the guiding questions we ask ourselves everyday at

Almost eight years ago, Kiva launched a global experiment to crowdfund microloans to help alleviate poverty and expand economic opportunity. We leveraged every new technology we could get our hands on to bring crowdfunding and microlending into the mainstream.

Today, more than one million budding small business entrepreneurs in 30 U.S. cities and 65 countries have received loans crowdfunded on In total, more than $440 million in loans have been crowdfunded by a global community of 940,000 people lending $25 at a time to the entrepreneur of their choice. And with a 98% repayment rate, the money you lend is truly a loan, not a donation—proof of a compelling mission and a sustainable model.

Kiva Zip is a new innovation from Kiva poised to dramatically expand access to small business microloans in the U.S. by leveraging new technologies and the power of crowdfunding. Kiva Zip aims to reach entrepreneurs who are locked out of traditional loan programs and entrepreneurs using their small businesses to advance social good in their communities.

Small businesses are the cornerstone of the nation’s economy and a stepping stone to the American Dream. According to the U.S. Small Business Administration, they represent more than 99% of all businesses in the country and create two out of every three net new jobs. Despite the economic power of small businesses, the credit freeze of 2008 has not thawed for the smallest of small businesses. Small business owners and budding entrepreneurs are denied loans for any number of reasons: the loan amount they seek is too small, their business is too young, their plan is too innovative, or their credit history is too short or damaged.  What they do have is the passion, plan and people in their community who know and trust them.

The lending institutions built to assist them are struggling to meet demand. There are just 400 microlending organizations in the U.S., with only 2% of potential small business owners being served. However, there are millions of community groups, religious communities, and individuals with deep community ties, who can transform social capital into financial capital on Kiva Zip.

Through Kiva Zip, these groups do not have to create their own loan programs. Instead, they can become Kiva Zip Trustees and vouch for the small business owners and budding entrepreneurs who they know and trust. Once endorsed, entrepreneurs can post their profile and begin getting their 0% interest loan crowdfunded by friends, neighbors, and Kiva’s global community of lenders. 

Over time, successful Kiva Zip borrowers are themselves becoming Trustees, endorsing other aspiring entrepreneurs who they trust in their community. As these trust networks virally spread, the reach of Kiva Zip’s 0% interest, crowdfunded capital can dramatically expand the availability of microloans in the U.S. 

Operating for just one year in pilot phase, Kiva Zip is already opening doors to opportunity for hundreds of small business owners and aspiring entrepreneurs across the country. Over 150 organizations and individuals in 30 states have become Trustees, including the Institute for Veterans and Military Families in New York and the City of Oakland in California.

More than half the U.S. loans crowdfunded on Kiva Zip are to entrepreneurs in their first year of operation, and about one-third have been startups. These entrepreneurs have been financially excluded or are creating a positive social impact in their neighborhoods and communities—exactly the types of businesses that can help create a sustainable economic recovery consisting of local jobs.

Today, seven out of ten small businesses’ loans are rejected by traditional lenders, but with access to crowdfunded “gap financing” from the internet community, many more of these businesses will be able to survive, create jobs, and ultimately qualify for loans from traditional lenders as their businesses succeed.

The crowdfunding movement has proven that when traditional lenders step back, millions of everyday people are willing to step up to become “Champions of Change” in their own communities.

Premal Shah is President and Co-Founder of