(Corrects dates Metoyer and Jenpiere received their loans. Also corrects description of Accion Texas-Louisiana's relationship with Accion USA.)
Last year, Mary Metoyer's New Orleans flooring company took in just $80,000 in revenue, one-third of her annual revenue before Hurricane Katrina struck. Her customer base of landlords and homeowners had started to return, but many were then hurt financially by the BP (BP) oil spill. When the bank she went to for a $10,000 loan lost her paperwork a few months after Katrina, she says she didn't have the heart to restart the application.
Metoyer did try her luck with a nonprofit, applying for a $10,000 loan early this year. She received the money in September, paid it off, and took out a second loan in November, for $6,000, to upgrade her 25-year-old showroom in New Orleans' Warehouse District. "Even though these are little loans, they have been a big, big help with financing some larger jobs I'm doing," says Metoyer, 64.
Mary's Floor World is one of the first Gulf Coast businesses to have obtained loan funding through Kiva.org, a microlender that pairs individuals who make interest-free loans with entrepreneurs across the globe. Founded in San Francisco in 2005, Kiva opened a pilot program in the U.S. a year ago. Since its domestic launch, the nonprofit says it has facilitated more than $1 million in loans to American small businesses. Globally, Kiva says, more than 487,000 individuals have gone through the site to extend credit to some 428,000 entrepreneurs in 54 countries.
Kiva typically partners with local microfinance organizations that process loan applications and collect repayments—in this case, Accion Texas-Louisiana, a nonprofit loan fund that Kiva added to its field partners' network earlier this year. Gulf Coast entrepreneurs using Kiva's site manage their loans through Accion Texas-Louisiana, which was established in 1994 as a member of the ACCION Network (itself part of Accion International). Loan applications are approved and processed through Accion, after which Kiva supplies the funding through its individual lenders.
From Katrina to the BP Blowout
The average U.S. loan through Kiva is $5,500, while Accion USA's average loan is $5,100. Damion Jeanpiere's New Orleans construction company, Rock Enterprises, got more than double these amounts. Jeanpiere, 40, used Accion Texas-Louisiana to apply successfully in April for a $13,900 working capital loan funded through Kiva after he says his 11-year-old company was turned down by two banks that said the amount he wanted to borrow was too small.
Rock Enterprises had recovered from Katrina by 2007, when revenues reached $600,000. Although Jeanpiere says he had to fight competition from unlicensed, out-of-state contractors, his company secured a couple of million-dollar residential construction projects along the Gulf Coast earlier this year. Then oil started gushing from BP's Deepwater Horizon well, spewing uncertainty on the region's economic prospects. Funding for his two big jobs was pulled indefinitely, just as some work that he had started doing for a nonprofit agency was cancelled. "This year should have been our best year ever. We had anticipated $3 million" in revenue, Jeanpiere says. Instead, he'll likely bring in closer to $300,000.
The loan will help keep Rock Enterprises in business, says Jeanpiere, who indicates that prospects are starting to improve. The company was recently certified as a state and federal disadvantaged business enterprise, which will give Jeanpiere a boost in bidding on government contracts. "It's been a bad period, but these organizations have been real supportive and helpful. The need for credit is extraordinary for small business, and it's important not to get taken in by con artists who want to loan you money for a fortune," he says. "I would do this again in a heartbeat when it's necessary."