Microloans Fulfilling Business Owners' Dreams in L.A.
A little money, spent in the right places, can do a lot of good. That's the ingenious idea behind microloans: find folks in the third world with big dreams but no access to cash, connect them with lenders who pony up just a few dollars at a time, and watch the magic happen. And if it works in East Africa, why no East L.A., or Venice, or San Fernando? Not only is it working, it's taking off.
London: What's the connection between the owner of a party store in San Fernando, a designer in Venice who creates one-of-a-kind caps, and a downtown loft-dweller, who sells vintage furniture and accessories? The answer is as close as Kiva.org, the website of the internationally acclaimed ”do-good non-profit,” which funds micro-loans in needy countries.
Jennifer London/Reporter: Kiva, which means "unity" in Swahili, started in 2005. A group of ordinary people loaned about $3,000 to small entrepreneurs in East Africa. Today, it's distributed more than $300 million throughout the world!
So what are Maria, the party store owner; Kareem, the hat guy; and Jacqueline, the vintage furniture dealer, what are these three doing on Kiva's website? It's because Kiva is now giving loans to needy American businesses right here in Los Angeles.
Roberto Barragan/VEDC: Money is available to grow your business. Money is available to hire people.
London: Roberto Barragan runs the Valley Economic Development Center, which is specialized in mini-loans for almost twenty years. He lobbied Kiva to a partner with V.E.D.C. to start giving out loans in L.A.
Barragan: Small businesses have always been part of every recovery this nation has experienced. However during this current recovery, it's been extremely difficult for small businesses to maintain that leading edge, because of lack of capital.
London: It's a problem Maria Ramirez knows well. Although the foot traffic is often musical around her small party store in San Fernando, there's not a lot of it. She supports herself and her son with the business, but it's been a struggle. And sometimes she's been forced to borrow money from shady lenders.
Maria Ramirez/Storeowner: I use people that give personal loans at a very high interest, which is 25 to 27 percent. Why? Because I never wanted to close my doors.
London: Maria couldn't qualify for a regular bank loan for an all too regular reason.
Ramirez: I was never able to get a loan with the banks, because my credit is unhealthy. This is my business. Welcome for come.
London: Maria, can you show me some pictures from some of your parties?
Ramirez: Yes! Yes! This is my book, my store, and my business.
London: Maria had a money making idea: to buy a bunch of tables and chairs to rent out for parties, but where could she get a $2,000 dollar loan with reasonable interest?
Barragan: If your credit is not bad, and we can show that you can pay back the loan over one year to three years, then we're able to approve it.
London: Since she could rent out the tables and chairs over and over again, it was a safe bet that they'd pay for themselves in no time.
Barragan: When I receive the money, I buy the tables. I buy the chairs. I buy the tablecloths, because it’s very important for me to grow in the future.
London: This, buying the tables and chairs allows you to grow your business?
London: And it's growing by leaps and bounds. Since Maria got the loan, her tables and chairs have been rented every weekend.
Barragan: This is for the party of graduation.
London: The amount of the loans varies. They can be as little as $500 or as much as $10,000. Don't confuse microloans with charity. Think of it like the old Chinese proverb, 'give a man a fish, feed him for a day.’ That’s a charity. ‘Teach a man to fish, feed him for a lifetime.' That’s a microloan.
Just like in foreign countries, the L.A. entrepreneurs have gone through a pre-approval process before being listed on the site. As a Kiva lender, you can invest as little as $25.
Barragan: You can actually scroll down and say "I like that business. I like that business. Oh, my God. That business is around the corner from where I live. I like that business. I want to put money to that specific business for that particular purpose. I like the individual."
Kareem Janey/Designer: They're really exciting. Really fun. Celebrities like them, and they're really popular right now in L.A.
London: Kareem Janey used to stand on the Venice boardwalk outside near this trendy hat boutique, hustling his customized caps one-by-one, but now he's inside the store getting top dollar for his expanded inventory, thanks to a $6,000 Kiva loan.
Janey: Banks are kinda black and white. 'What's your credit score? See ya later,' and Kiva, I think, works with companies and has an interest in seeing you succeed.
London: Although he still creates the designs, Kareem can now afford to buy more caps and pay others to paint them.
Janey: You guys are from Europe?
Tourist: Yeah, the Netherlands.
Janey: Nice. You have to take something like this home. It's so unique, and it represents L.A. culture. You'll get all the chicks, when you go back. Guaranteed!
London: He also used the Kiva money for a catalog and to update his website.
Janey: I've actually worn caps to events, and somebody wanted to buy it off my head. Actually, there was a bidding war going on for the cap that I was wearing, and it went to the highest bidder.
Jacqueline Sharp/Owner of Fort: If we could get more small loans to more small businesses and entrepreneurs, I think we could put ourselves back to work.
London: Why the name “fort?”
Sharp: In my family, when I was a kid, we would pull furniture from all over the house to build forts with. Today, I'm doing the same thing. I think it's so fun to pull pieces from different eras, and play with them, and mix and match and surround yourself with pieces that you love.
London: Jacqueline Sharp's Forte at Fort is finding unusual vintage pieces, making them over again, and making them into something even more unusual, like this old magician's cabinet.
Sharp: We put steel inlay on the outside, so you can use magnets. The inside is perfect for storage, shelves, drawers.
Photographer: What things need to be shot that we haven't shot already?
Sharp: There are a few home accessories that need to be shot -- a few chairs.
London: Tonight, there's a photo session of new items for the official grand opening of Fort.
London: How much was the loan, and what did you do with the money?
Sharp: The loan was for $5,000, and with that, I was able to buy a welder. The welder was $1,000 and then to bring someone on part-time, so I've been able to pay an employee. Where I was at, I felt stuck. I was doing everything myself. So to be able to get the loan, and be able to bring someone on part-time, it's made all the difference.
Barragan: People are not waiting for the next big company to come to L.A. to get hired. People are saying, “You know what? I can't wait anymore. Maybe my unemployment is gonna run out. I need to do something for myself and for my family, and I have an idea.”