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Group offers zero-interest loans to spur local small businesses

MIDDLEBURY — The Addison County Economic Development Corp. (ACEDC) is well-known for maintaining a revolving loan fund that allows qualifying businesses to borrow tens of thousands of dollars.
The ACEDC is now serving as a bridge for no-interest loans for local entrepreneurs seeking as little as $500 to help jump-start their small enterprises.
At issue is the recent selection of ACEDC as the first Kiva Zip trustee in the state of Vermont. Kiva Zip is a loan program within the global nonprofit Kiva, based in San Francisco, that offers zero-interest loans for small businesses and entrepreneurs in the United States and Kenya through crowdfunding.
“It’s a wonderful opportunity to support a wide range of businesses and entrepreneurs that we might not normally serve,” ACEDC Executive Director Robin Scheu said of the new affiliation with Kiva Zip. “It helps entrepreneurs gain access to funding to start or grow a business. And it’s a way to make an impact in the communities in which these businesses operate. We are delighted to have another tool in our toolbox to support our businesses.”
ACEDC helps local businesses grow and encourages prospects to settle in Addison County. Since 1993, ACEDC has loaned more than $3.5 million to dozens of local businesses, creating or retaining more than 1,200 jobs in the county, according to Scheu.
Kiva Zip trustees are individuals or organizations who can vouch for an entrepreneur’s character and reputation when that person is applying for a loan through the program, which typically awards sums in the $500 to $5,000 range, according to Scheu. Returning borrowers can apply for loans of up to $20,000, provided they have established a good track record in repaying their previous loan and have put together sound business plans.
Kiva Zip was launched as a pilot project in November 2011, and officially began operations in September 2012. There are three principal aims for Kiva Zip, according to its website: To expand financial opportunities and access for borrowers who otherwise lack them, to reduce the cost of capital for borrowers who need it, and to enhance the connectedness between lenders and borrowers. Kiva Zip had disbursed loans to approximately 1,400 borrowers thanks to around 15,000 lenders as of the end of August 2013.
Scheu explained she found out about Kiva Zip through an official with the Vermont Agency of Agriculture, Food & Markets.
“As soon as I heard about it, I thought, ‘Wow, that would be a great program for us to get involved in,’” Scheu recalled. “I took advantage of what I thought was a great opportunity.”
So ACEDC officials filled out an application to become a Kiva Zip trustee. The organization was vetted and accepted. This means that entrepreneurs can approach the ACEDC en route to seeking a loan through Kiva Zip. The ACEDC will check out the applicant’s business plan, then determine whether to recommend the applicant to Kiva Zip as a good loan risk. The ACEDC’s recommendation will carry much weight, Scheu said.
While a $500 to $5,000 loan doesn’t sound like a lot, it can make a big difference for a nascent business venture, Scheu noted. For example, a $500 loan could pay for a stall at a trade fair for an artisan jewelry maker. A $2,000 loan could buy a new computer. A $5,000 loan could buy a used van to enable a caterer to serve larger events.
Scheu explained that banks are often unable to provide these smaller loans. And not every entrepreneur aspires to create the next Dealer.com.
“This is a way to help businesses that might not qualify for traditional loans,” she said.
“The idea is to help a small business grow and for it to have some community impact.”
It should be noted that the small loans are made possible by small donations to Kiva Zip — as little as $5.
While Addison County is home to some large business like Middlebury College, Porter Medical Center and UTC Aerospace, its economic backbone continues to be small enterprises.
“(The Kiva Zip loan program) fits the culture of Addison County,” Scheu said.
Anyone seeking more information about the Kiva Zip program should contact the ACEDC at 388-7953.
Reporter John Flowers is at johnf@addisonindependent.com.

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