With thousands of small businesses wiped out by the recession, former President Bill Clinton on Wednesday launched a microlending initiative aimed at helping business owners in the nation’s hardest-hit regions stay afloat.
The move, dubbed Kiva City and announced at the Clinton Global Initiative America conference in Chicago, extends small-business lending strategies used to fight poverty in some of the world’s poorest nations to Detroit, Milwaukee, Pittsburgh and other big U.S. cities.
Led by , an online microlending firm based in San Francisco, and Visa Inc., the initiative seeks to raise awareness of microlending in underserved neighborhoods by rallying support from community leaders. The strategy was initiated in Detroit.
Microlending connects entrepreneurs with pools of lenders, who contribute as little as $25 each. The loans, which are typically about $7,000, are used to pay rent, buy equipment or cover other daily operations rather than major capital investments.
“In this economy, where lending has tightened up, these kinds of alternative sources of capital are becoming more and more necessary,” said Kiva co-founder Premal Shah.
For instance, Shah said, a home-based day-care business may require a few thousand dollars for permits, staff and toys but isn’t likely to qualify for a traditional bank loan.
