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One Bike Entreprenuer's Novel Approach to Raising Funds



Earlier this year, I provided an overview of Pedal to the People - the mobile bike shop in Chicago that comes to you to provide repairs and support. Founder Adam Clark is now hoping to expand his operation and is working with Kiva Microfunds to finance that growth.


​You may have heard of Kiva for their work in micro-financing to individuals and entrepreneurs in third-world countries. This story however is an example of using the same approach in the heart of Chicago.


Challenge of No Credit


After six years of building Pedal to the People, Adam was looking for a way to grow his business. Providing bike products to customers when he was working on their bikes seemed like a good idea. For Adam, stocking essentials like inner tubes, brake pads and bike computer batteries was a proven part of the business. However, things like riding bags, helmets and bike racks represent a new opportunity. Having a catalog of products available in the trailers would help his team to service customers better in the field and ultimately grow.


Adam's challenge however is that he does not have the $5000 to stock this inventory. More challenging still is that he has no established credit. He does not own a credit card (never has), nor does his business

have a line of credit. Even though he has no debt, like 45 million other Americans he has no credit score and thus he doesn't fit the lending profile required by most banks to secure a loan.


Earlier this year, Adam was working at a bike fundraiser doing free repairs when he was approached by a Kiva representative. The individual shared with Adam that Kiva supports 0% interest, crowd-funded microloans. Unlike other crowd-funding sites such as Kickstarter, Kiva is providing a microloan. This means that the lender gets paid back as the borrower succeeds. Intrigued, Adam decided to participate in this this new approach to fundraising.

 

Loans that Change Lives


Kiva Microfunds is a non-profit organization that allows people to lend money via the Internet to low-income / underserved entrepreneurs and students in 82 countries. Kiva lets individuals lend as little as $25 to help create opportunity around the world.


Kiva describes itself as loans that change lives. Since it's inception in 2005, Kiva has helped to disburse over $790 million in microloans to individuals all over the world. Their repayment rate is 98.44%.


The organization looks for projects that support the community. Additionally, they evaluate opportunities based on the the willingness of the entrepreneur to support others. For instance, Adam donated to an organization in Milwaukee that wants to document victims of violence to share their story and bring about change. They needed money for a better camera to help them with their social justice mission so he made a micro-loan to help them.


And unlike banks, they do not use credit scoring. Rather, before creating a Kiva profile, Adam needed to demonstrate his ability raise a portion of the loan from people he knows. In effect, they are using social capital to demonstrate creditworthiness.

​I've never asked for help like this before. It's a new experience for me - Adam Clark

Lessons Learned for the Bike Entrepreneur


Pedal to the People Founder, Adam Clark

I asked Adam what lessons he has learned from this experience. He shared that he never thought he would be asking people to support his business. And while it's scary, it feels okay to make yourself vulnerable and ask for help. The effort has helped him to talk to people about his business. He also pointed out that you don't know unless you ask.


He also feels that this experience helps him feel more connected to others. By participating with Kiva, in addition to asking for loan, he's also helping them to help other people. It's how Adam imagines that local banks used to operate. He likened it to the quote from the movie It's a Wonderful Life - "your money's not here, it's in Joe's house."


You can read more about Adam's story and support his business by accessing his Kiva profile.

Author's Note: After interviewing Adam, I was inspired by his hard work and entrepreneurial spirit and am now among his lenders.

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