Accion VS Kiva U.S.

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Any entrepreneur will testify to the difficulty of securing capital for their businesses, particularly start-up businesses. Banks aren’t exactly known for being understanding or compassionate in assessing people’s worthiness to get a business loan. Especially in this post-recession climate, it’s only natural that entities offering smaller loans to those without perfect credit would rise in prominence to fill the gap.

With that in mind, we thought it might be fun to pit Accion and Kiva, two of the world’s leading nonprofit microlenders, against each other in a battle for microsupremacy. (Here at Merchant Maverick, we have a weird idea of fun.)

Accion (see our review) and Kiva U.S. (see our review) share a great deal in common, yet also differ in important ways. Accion was founded as a community development solution in Venezuela in 1961 and has since spread around the world, offering microloans and financial education in more than 30 countries. Accion started offering loans in the U.S. in 1991; all references to Accion in this article pertain specifically to their U.S. branches.

While Accion’s mission is to provide financial services to underserviced communities, their loans are not free. The application process is extensive and thorough; in fact, it takes significantly longer to get through than that of the average online lender. You’ll have to sign a personal guarantee or put up collateral to get funding, and Accion’s interest rates range from 8% to 22%.

Founded in San Francisco in 2005, Kiva’s mission is to bring microfinance (in the form of loans as small as $25) to individuals and communities around the world who have little to no access to other sources of funding. Kiva U.S., launched in 2016, differs from Kiva’s other programs. Instead of seeking funds from funding partners, borrowers request funds directly from members of the Kiva community. Think Kickstarter, but for loans.

Unlike Accion, loans obtained via Kiva U.S. carry no interest. It is perhaps the only lending program in which the lender does not stand to make a profit. While this makes Kiva U.S. quite the value proposition for borrowers, the maximum loan amount is significantly smaller than Accion’s ($10K vs $50K), and the application process can be even lengthier.

Read on to see if Accion or Kiva U.S. best fit your funding needs.

Borrower Qualifications

You must meet a relatively long list of qualifications to obtain an Accion loan:

  • Be at least 18 and a U.S. resident
  • Credit score must be at least 575 (500 in some places)
  • Must have sufficient cash flow to repay the loan
  • Must not be more than 30 days late on any bills
  • No late rent or mortgage payments in the last 12 months
  • No declarations of bankruptcy in the last 12 months
  • No foreclosures in the last 24 months
  • No mortgage rate adjustments due during the loan term

If your loan pertains to a business that’s been in operation for fewer than six months, the following also applies:

  • Your business is home- or incubator-based
  • You have less than $500 in past-due debt
  • Your business isn’t in one of Accion’s disfavored industries (porn, gambling, guns, etc.)

Accion’s loan requirements may vary based on locality. Check out the requirements where you live before applying.

Kiva U.S., in contrast, has a very different set of requirements. Their lending model relies on the concept of “social underwriting” — in the application process, you’re asked to “demonstrate social capital” by 1) lending at least $25 to another Kiva small business borrower and 2) recruiting lenders from your personal and/or professional networks to loan to you. According to Kiva’s website:

“Depending on the size of the loan and multiple factors, borrowers must invite between 5 and 35 lenders from within their network.”

The idea is that people are more than just a credit score; they should be able to leverage their reputation among those who know them best to demonstrate their creditworthiness.

Beyond this, Kiva U.S. requires that you be a U.S. resident who is 18 or older, that your loan is for business purposes, that your business isn’t bankrupt or in foreclosure, and that your business isn’t engaged in the following:

  • Multi-level marketing / direct sales
  • Illegal activities (e.g. gambling, scams)
  • Pure financial investing (e.g. stocks)

Terms and Fees

These are the typical rates and fees for Accion and Kiva U.S. However, be aware that because Accion’s offering’s vary by state, the rates quoted below may be a little different than what’s available in your area.

AccionKiva U.S.
Borrowing amount:$500 – $50K$25 – $10K
Term length:6 – 60 months6 – 36 months
Other fees:3% – 5% closing fee
$135 processing fee
Interest rate:8% – 22%0%
APR:Approx. 9.5% – 33%0%

Really illuminates the contrast, doesn’t it? Also, note that Accion requires a personal guarantee and specific collateral in certain situations; Kiva does not. Accion also charges a processing fee and a closing fee; Kiva does not.

As the terms and fees go, Accion resembles a more “traditional” online lender, while Kiva U.S., with its smaller, interest-free loans, is truly in a class by itself.

Application Process

Both Accion and Kiva U.S. will make you undergo a longer application process than will other online lenders, so be prepared to wait for funding. If a quick capital infusion is what you need, you’ll have to look elsewhere.

With Accion, you’ll begin by filling out the application on their website, answering questions about your business, income, place of residence, education, and liabilities. When you’re done, you’ll get a call from Accion to let you know whether or not you qualify. If you do, you’re directed to talk to a “lending team member” who will guide you through the process of assembling a loan application. This will largely consist of gathering proof of the information you gave in the initial questionnaire on the website. After this, it will take some time for Accion to verify everything. Some Accion applicants have complained about the invasiveness of this process. The average time from application to funding is three to four weeks.

The process for obtaining a Kiva U.S. crowdfunded loan is even more involved. As with Accion, you’ll fill out an application on Kiva’s website with personal and financial information and details of your social media accounts. You’ll need to submit a photo and a short bio about you and your business for the loan campaign. You can also get a Kiva trustee to vouch for your character and endorse your campaign (thereby improving your campaign’s prospects), but this is no longer mandatory.

At this point, a Kiva member will review your application and let you know whether you’ve been approved. Even if you are approved, however, there’s still a ways to go before you’ll see any funding. You’ll be asked to lend at least $25 to someone else’s Kiva loan campaign. This makes sense, as Kiva’s entire ethos is built around reciprocity and democratizing the process of raising business funds.

Subsequently, your loan campaign will enter a 15-day private funding period in which you’ll be required to recruit 5 to 30 people from your personal and/or professional networks to contribute funding to your loan. The more funding you request, the more people from your network you’ll need to recruit.

After the private funding period, you’ll then enter the public funding period. You’ll now have 30 days to raise funds from anybody and everybody. If and when your loan goal is reached, the money will be sent to your PayPal account within seven days.

Sounds like a lot of work, doesn’t it? Kiva U.S. loans may be interest-free, but acquiring them requires significant reserves of time, effort, and patience.

Sales and Advertising Transparency

Here’s an area where both Kiva and Accion excel. As nonprofit entities committed to social responsibility and financial education, they don’t try to upsell you or entice you into doing anything with incomplete information. Both companies are very transparent in presenting what they have to offer.

Accion goes a step further, offering a wide array of business resources as well as information about workshops and events that they hold in cities around the country.

Customer Service and Technical Support

Accion and Kiva have thorough and extensive FAQs that should answer just about any question you have about the process. Should you need further assistance, both companies provide email and phone support (though Kiva’s phone is voicemail only — they’ll get back to you within 48 hours).

Reviews and Complaints

Professional reviewers have been rather keen on both Accion and Kiva U.S., praising their openness and transparency while appreciating their mission to provide underserved communities with much-needed business capital.

Accion’s closing costs and processing fees have come in for criticism, however, as has Kiva’s lengthy and difficult funding process.

A few Accion users have complained about rejection for sometimes murky reasons, as well as an overly invasive personal investigation to determine your loan-worthiness. Others have lamented Accion’s relatively high-interest rates and poor customer service. However, many have praised the service for helping them when banks wouldn’t.

Most user reviews of Kiva posted online don’t pertain to Kiva’s current U.S. division and its offerings, thus rendering them less than useful for our purposes.

Final Verdict

It wouldn’t be terribly helpful to declare a “winner” between Accion and Kiva U.S., as their divergent funding models might be right for one business and may not suit another. In particular, Accion’s offerings differ somewhat depending on where in the U.S. you live, so you’ll have to visit their website and enter your location to see exactly what options they have for you. However, some general conclusions can be drawn.

If you run a business that requires a modestly-sized loan of less than $10K and are willing to invest the time and effort required to conduct a social fundraising campaign, you absolutely cannot do any better than Kiva U.S.’s interest-free microloans.

However, if you’re in need of a larger loan, would rather not have to go hat-in-hand to potential lenders, and are unable to meet the onerous requirements to get a bank loan, Accion is an excellent funding option well worth investigating. In fact, it’s a favorite of ours here at Merchant Maverick.

Read our full Accion and Kiva U.S. reviews to get the full picture of these organizations.

Jason Vissers

Jason Vissers

Jason Vissers is a writer, cereal chef and Netflix aficionado from San Diego. A native Californian who enjoys the beach, Jason nonetheless prefers to do his surfing on the World Wide Web, the raddest wave of them all. Jason can't eat raisins.
Jason Vissers

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