The City of Oakland and Mayor Libby Schaaf have big economic plans, but the one the mayor is quick to discuss is anything but “big,” unless you consider the potential impact on small, locally owned businesses striving to succeed.

In 2013, the city became the first city in the country to become a Kiva Zip trustee, a role Schaaf says has infused the city’s small business owners with necessary funds to grow, without using taxpayer money. A trustee, like a sponsor, is required for a business seeking a loan from Kiva Zip’s online network of lenders. To date, Kiva has given $75,000 in interest-free loans to 13 Oakland businesses backed by the city.

“I think it’s cool, because so often we see government sort of following or even impeding small business,” said Kiva Zip Senior Director Jonny Price.

Oakland seeks to serve as trustee for businesses in underserved areas of the city, offer employment and/or meet a community need, according to the city’s website.

Seventy-five thousand dollars pales in comparison to Bay Area multimillion-dollar startup investments that have fueled the Bay Area’s economic resurgence, but the impact remains significant, according to Price.

“The microenterprises we are working with have wafer-thin margins,” Price said. “So if we can just inject a little financial support, hopefully that can be the difference.”

It was the difference for Natalie Pearce, owner of a pop-up bakery operating out of Kitchener Oakland called Natty Cakes. The city agreed to be the trustee of Pearce’s $5,000 loan request, which funded in February.

Natalie Pearce of Natty Cakes earned a $5,000 loan in Feb. with the help of the city of Oakland.

Natalie Pearce of Natty Cakes earned a $5,000 loan in February with the help of the city of Oakland.

“In a lot of ways Natty Cakes was on borrowed time” she said as she enters her third year in business. “I was asking for help and having trouble making ends meet. The loan gave me some breathing room to really look at what wasn’t working and which direction I needed to take the business.”

Schaaf said Oakland’s role as a trustee builds interest and lending power beyond the specific companies it backs.

“The city has taken a lead in endorsing entrepreneurs, so now other organizations have come aboard and followed our lead. We are rapidly approaching (Kiva loans for) 100 small businesses in the East Bay,” Schaaf said.

An example of that is Baia Pasta, owned by Renato Sardo and Dario Barbone. Barbone heard of Kiva Zip from the owner of Oakland-based Good Eggs, who volunteered to be Baia Pasta’s trustee. Barbone said his business networks with the city despite not needing it as a trustee.

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Baia Pasta in Jack Londoan Square offers a variety of artisanal, organic pastas wholesale, retail and online. Its Kiva Zip loan, if funded, will help launch company’s the first gluten-free product.

The business, now in its third year, focuses on artisanal products for Oakland’s growing food scene that can also grow though online sales.

Price calls the commitment from the city toward the companies it sponsors a “testament” to the overall vision, even if it remains a small part of an economic plan largely comprised of large-scale billion-dollar projects.

A June 2014 economic report included updates on major economic projects like the $1.2 billion Global Trade Logistics Center, the $1.5 billion Brooklyn Basin waterfront development and the Coliseum City development. Schaaf recognizes the need for high-ticket development and the recruitment of high-wage jobs. But she wants growth in Oakland to come with a focus on small business, diversity and economic uplift in every neighborhood, which is where the impact of Kiva Zip outweighs its dollar amounts.

The city, she said, can help “co-create” a culture that sets an example about the type of business growth it has and its commitment to local business. Kiva Zip enhances that, she said.

“It’s part of creating a sustainable investment. Your lenders are your investors. They are become the marketers, the customers, the supporters,” Schaaf said.

Price said the vast community is what made the program work. Few large personal loans are made. The risk is small and diversified.

“The really cool thing is the loan comes from what might be 200 lenders each lending on average of $25,” Price said.

The entire loan amount must be raised through the Kiva website or funds won’t be dispersed.

“It’s all or nothing,” Price said.

One company the city sponsored, a tech startup offered by Oakland resident Vincent Lau, didn’t reach its goal of $5,000. He raised only roughly half the money he needed. Price said he trusts the community of lenders who for whatever reason didn’t back Lau.

“The majority of our entrepreneurs are more conventional neighborhood businesses. It’s always painful when a small business (doesn’t get funded), but it’s a good indication that the tech companies are more a fit for Kickstarter-type campaigns,” Price said.

He said that critical mass of support is the best way Kiva knows a borrower is a good risk. Ninety-eight percent of the loans backed by a trustee are repaid, Price said.

“There’s wisdom in that crowd,” of lenders Price said.

With about six weeks left, Baia Pasta has raised nearly half of the $10,000 loan it seeks. Meanwhile, Sal’s Deli, owned by a native East Oaklander, is struggling, having raised just 4 percent of the $5,000 the owner is hoping to borrow to open the neighborhood deli. Price said the platform promotes them all who make it through the public round. Sal’s Deli still has plenty of time to catch the lenders’ fancy.

Barbone couldn’t be more pleased with the entire process, he said.

“It’s a win-win, 360-degrees,” Barbone said, looking forward to the day its loan arrives. “We get to make gluten-free pasta. Celiacs finally will have a nutrient-dense artisanal pasta, and the community gets to understand the reasons why we do it. A lot of loving labor goes into each noodle.”

Update: As of 5/18, Baia Pasta’s loan has been fully funded. Sal’s Deli has leapt to 43 percent with 27 days more to go. 

3 Responses

  1. Kendra Lee

    I was honored to be a lender to Halmoni Vintage and Treasures through Kiva Zip, which achieved full funding. I didn’t know Oakland was the first city in the nation targeted by Kiva Zip – now, I’m even more excited to be involved.

    Reply
  2. Kendra Lee

    Please come visit Halmoni on 2nd St, near the Lake, in my awesome hood. Halmoni is a magical place, run by a woman who is a true leader in our community and city.
    http://www.halmoni.net/

    Reply

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