By Natalie Anderson
natalie.anderson@salisburypost.com

SALISBURY — City Council members have paused a partnership with the KIVA microloan program for women and minority business leaders to iron out communication and organizational challenges.

KIVA is a national loan program that provides women and minorities zero-interest and zero-fee micro-loans ranging from $1,000 to $15,000. The program is a first step for women and minorities who don’t qualify for loans via the traditional route. The goal is for borrowers to build capital and the ability to attain larger loans from the Small Business Administration or large financial institutions, for example.

Alissa Redmond, owner of South Main Book Company, is among the first business owners in Salisbury to use the KIVA platform to seek funding for a loan. Redmond is seeking a loan of $15,000 to use as a down payment to purchase her storefront. She purchased the space for the bookstore two years ago after being evacuated from Bolivia, where she served as an American diplomat.

“By purchasing, versus leasing, my space, I will be able to permanently leave my second, full-time job in order to devote the rest of my professional life to the art of selling books,” Redmond said on the KIVA website describing the loan. “I have donated over $15,000 in books to various institutions in Rowan County, and expect to continue that trend for the rest of my life. I am so grateful to my community for embracing my family, particularly as I moved just prior to COVID’s less welcome arrival. I intend to raise my family here surrounded by good neighbors and good books.”

Redmond told the Post she’s familiar with the KIVA platform and has used it to loan money to borrowers before. She applied for the loan about six weeks ago. After a period of delays attributed to staff members contracting COVID-19, Redmond said she was informed she could begin the private funding phase of 15 days. During that time, borrowers must solicit funds from their own network before they’re publicized on the KIVA platform. Then, donations can be made by the public and the more than 1 million lenders across the nation who are on the platform.

The city of Salisbury committed to KIVA last year and paid a $20,000 annual fee, which was $5,000 less than the normal amount charged due to Salisbury being among the smallest participating cities. Additionally, the city formally set aside $60,000 in the 2021-22 budget from CARES Act funding to support three years’ worth of matching funds for borrowers.

The city picked Self-Help Credit Union as its hub. The credit union is tasked with housing the point-of-contact for marketing and promoting KIVA and the borrowers who go public. Salisbury decided to serve as the funder, and Councilman David Post, along with Pete Teague of Livingstone College, were the only formally declared trustees. Trustees are tasked with mentoring, assisting and/or endorsing the borrower.

As of Wednesday, Redmond’s loan is 74% funded, with 28 days left to raise funds. So it’s likely she’ll meet her goal. However, there are at least three other borrowers in Salisbury who were unable to meet their fundraising goal. If borrowers can’t obtain the full amount of the loan, all the money given by lenders and managed funds are returned and the borrower doesn’t receive the loan.

During a discussion among City Council members Tuesday, Post said neither KIVA nor the Self-Help Credit Union told him three borrowers went public.

Redmond said she had other options to seek funding for her loan and expects an inheritance that’s currently tied up in escrow. However, part of the reason she decided to seek a loan through KIVA was to better understand the process in hopes of helping fellow business owners who are preparing for the slower retail season. Challenges she faced centered around a lack of communication about the process and how matching funds from the city work.

“It’s been a very frustrating process,” Redmond said. “I think everyone’s hearts are in the right place, but we’re about to get into a really ugly period for our economy, both locally and nationally.”

Both Post and Elaine Spalding, president of the Rowan County Chamber of Commerce, said some personnel and organizational changes at Self-Help have prevented staff there from following through on assisting borrowers with this process. Redmond said she wasn’t able to receive direct answers to certain questions about how the process worked from staff at Self-Help Credit Union.

Council member Harry McLaughlin Jr., who owns McLaughlin’s Grocery, said he recently sought a loan through Self-Help and considered KIVA before ultimately deciding on another plan. He discovered KIVA can be an ideal resource for businesses in their second or third year when they’re looking at the numbers and see needs arising.

“The problem is, it’s really the hub that they had. There was no one really reaching out and helping explain it to you,” McLaughlin said. “The program is a good idea and it’s worked. I think it’ll be valuable, especially for small businesses starting out, but you need to have someone who can reach out to those small businesses.”

Spalding said the KIVA program is a city initiative that the chamber promotes and added the Chamber is working on a number of initiatives to better support minority businesses, with those plans still being worked out.

During the City Council meeting Tuesday, Post outlined the organizational and communication challenges, inviting council members to weigh in on where to go next. Post said the city is due to renew its contract and pay another annual fee to KIVA in March. An alternative option is to deem the Salisbury Community Development Corporation as the hub, which would house a part-time position to market and promote the program and assist borrowers with the process. Post suggested Salisbury-Rowan NAACP President Gemale Black as a potential candidate given his connections in the community, and the Blanche and Julian Robertson Family Foundation agreed to fund that position for at least a year.

A third option Post presented was moving the whole partnership in-house, which he said could further burden an already understaffed Finance Department. Ultimately, council members agreed to hit pause and seek input from the public about whether it’s the right investment.

Of the $60,000 set aside for matching funds, Post said KIVA charges a 5% or 10% administrative cost. If the repaid loans are returned to the city, a 10% fee is charged. If the repaid loans return to KIVA to recycle for future loans, only a 5% fee is charged. None of the $60,000 has been used, Post said, because the city hasn’t yet had the opportunity to match funding for borrowers.

Post added he’s reached out to KIVA to negotiate the annual fee if they continue the program and referenced the inadequate communication about mutual responsibilities.

Contact reporter Natalie Anderson at 704-797-4246.