3 OTHER SOURCES
OF SMALL BUSINESS
FUNDING
BUSINESS FINANCING DC DOING BUSINESS GUIDE 2018/2019 49
Other financing options include crowdfunding, venture
capital firms, angel investors and small business
investment companies.
CROWDFUNDING
Crowd-sourced funding for creative projects has become a
popular way to raise capital. Crowdfunding allows multiple
people to network and pool their money and resources
together, typically through a crowdfunding website, to
support a business, project, or campaign. Unlike angel
investments, in which an investor takes a large stake in a
small business, crowdfunding enables a small business to
attract multiple people who take a small stake in a business
idea by contributing towards an online funding target. This
spreads the risk among backers and creates a strong network
of support for your business. Popular crowdfunding sites are
Kickstarter (kickstarter.com) and Indiegogo (indiegogo.com).
CROWDFUNDED MICROLOANS — KIVA
Kiva is a nonprofit organization that works to alleviate
poverty through crowdfunded microloans. By leveraging
the internet and a worldwide network of microfinance
institutions, Kiva lets individuals lend as little as $25 to help
create opportunity around the world.
Kiva has two microlending platforms that help aspiring
entrepreneurs and small business owners to access capital:
KIVA CITY DC—A partnership between Kiva, the Latino
Economic Development Center, and Capital One, Kiva
City DC enables small businesses in the DC metro area to
receive crowd-funded loans of up to $10,000 to support
their business goals. Kiva DC loans are a good option for
entrepreneurs who can’t meet the collateral requirements
for other microlenders; many loans made are under
$2,000, and lenders can give as little as $25. Potential
borrowers can apply online at kiva.org/dc.
KIVA ZIP LOANS—Kiva Zip is a peer-to-peer lending pilot
program that provides no-interest loans to qualified
borrowers. Individual lenders can contribute as little as
$5 to support a borrower. An average loan made through
Kiva Zip is $5,000 with a two-year repayment period.
Kiva Zip borrowers must be endorsed by a Kiva trustee.
Trustees are individuals and organizations that identify
individuals they believe would make a good Kiva Zip
borrower. Once approved, the publicly endorsed borrower
will receive ongoing support from the trustee. A borrower
has 45 days to become fully funded through the online
Kiva Zip profile, and fully funded loans are disbursed to
the borrower through PayPal. After successfully repaying
a loan, the borrower is then eligible for larger loans. More
information is available at zip.kiva.org.
To learn more about whether crowdfunding is right for your
business, visit crowdfunding.about.com.
VENTURE CAPITAL INVESTMENT
Venture Capital firms usually require some management
control and repayment in exchange for their financial
investment. An advantage to using private investors is that
they bring experience and their network of contacts to a
business. To obtain a listing of area venture capital firms
or other private equity investors, visit the Mid-Atlantic
Venture Association (MAVA) online and choose Member
Profiles, which allows a search for funders by industry and
location. MAVA is a membership organization of investors,
entrepreneurs, advisors and other company-builders.
(703) 506-9300 · mava.org
TAX-EXEMPT BONDS
Revenue bond financing is an attractive source of
funding for businesses and nonprofit organizations that
locate or operate within the city. A qualified private
business can borrow up to $15 million of tax-exempt
bonds to invest in buildings, equipment and furnishings
used for the qualified business. Besides being taxexempt,
bond financing is usually at least two percentage
points below market interest rates. A nonprofit
organization that is located in the District of Columbia
may borrow as much as it needs (see Ch. 5: Financial
Incentives for eligibility requirements).
/(kickstarter.com
/(indiegogo.com
/dc
/zip.kiva.org
/crowdfunding.about.com
/mava.org