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High-Impact Lending Where Others Can't

Posted By Luke Seidl, Kiva, Thursday, January 9, 2020
Updated: Monday, January 13, 2020

Kiva, a San Francisco-based global nonprofit, has quietly lent to social enterprises at their earliest stages, working in the most difficult environments.


The Missing Middle Challenge

There are amazing small businesses in emerging markets run by brilliant social entrepreneurs that cannot obtain the financing required to grow. Kiva Labs: Social Enterprises helps them bridge that gap and scale their impact. In just three years, Kiva Labs has made over 100 direct loans, totaling $5.7 million, to more than 80 social enterprises.

For example, meet Kwami Williams. Kwami is a Ghanaian national and a Forbes 30 Under 30 recipient who studied aerospace engineering at MIT and NASA before returning to Ghana as a social entrepreneur.

The social enterprise he co-founded, MoringaConnect, has a mission to improve lives through the moringa tree -- a drought-resistant, fast-growing crop known locally as ‘the miracle tree.’ Buying moringa from over 5,000 smallholder farmers in Ghana, the company provides technical training and inputs, and teaches farmers how to integrate moringa into their diets to combat rural malnutrition.

Thanks to the Kiva Labs loan we were able to co-finance and install West Africa's largest solar irrigation system and scale our business operations in order to supply moringa leaf powder to partner companies sold in Whole Foods and Kroger in the USA.” -- Kwami Williams, Co-Founder and CEO, MoringaConnect


MoringaConnect falls into what is called “the missing middle” category of small businesses that are too large for microfinance, but too small for traditional bank loans. Financial institutions reject them as too small and risky to underwrite, or require unaffordable interest rates or unreasonable collateral. Over 300 million small businesses are excluded from the financial system. And yet they are the primary driver of job creation in emerging markets.


While investment in emerging markets is increasing, the vast majority of these investments - roughly 97% - occurs in amounts greater than $10 million. More money is flowing toward social enterprises, but minimum deal sizes haven’t shifted downward. The seed stage that lies between grants and early stage investors is among the most difficult stages for small businesses to traverse.

How is Kiva Solving for The Missing Middle?


Kiva is a global nonprofit founded in 2005 with a mission to expand financial access to help underserved communities thrive. By raising impact-first capital, Kiva has facilitated more than $1.3 billion in loans from 2 million lenders. That capital has been lent to 3 million borrowers in over 90 countries. The majority of Kiva’s lending reaches borrowers through its network of more than 300 Field Partners, local organizations that distribute the funds. But through the Kiva Labs: Social Enterprises program, formerly known as Kiva Direct-to-Social Enterprise (DSE), Kiva has lent more than $5 million directly to early-stage social enterprises.


Kiva Labs provides short-term working capital loans to help social enterprises to escape the “missing middle” by enhancing productivity, removing bottlenecks to growth, and developing the track record they need to attract institutional funding. Kiva’s social enterprise loans are most often in amounts of $50,000, and are available up to $100,000 for repeat borrowers in good standing. Each year over 70,000 lenders contribute to Labs loans on


Kiva Labs de-risks and prepares social enterprises for impact investors. Most often, Kiva Labs is the first significant funding these companies receive after grants or friends-and-family money. One requirement is the company must be financially excluded -- unable to qualify for a reasonably priced unsecured loan. We are on a journey with the entrepreneur -- providing a first loan to prove the business model and a second loan to grow commercially and graduate to larger impact funds, where they’ll achieve impact at scale. 

100 Social Enterprise Loans and Counting

To date Kiva Labs has made over 100 loans, totaling $5.7 million, to more than 80 social enterprises in over 30 countries. For every dollar lent, we’ve measured that social enterprises receive $5 in follow-on investments (i.e. additional money from other organizations). This amounts to nearly $26 million in follow-on funding. As a result of Labs lending, almost 7,000 jobs have been created.


With an intentional focus of empowering women and girls, 48 of the social enterprises, over half the portfolio, are women-owned or -led. These women-led businesses have a higher repayment rate than their male-led counterpart enterprises. One example is Shazia Khan, founder of EcoEnergy, a social enterprise that has distributed solar home lighting systems to over 170,000 rural Pakistanis on credit. For Shazia, the Kiva Labs loan allowed her business to survive.


“Without the Kiva Labs loan, I would not have been able to prove my business model. I don’t even know if we’d still be standing. The Kiva loan was critically important to prove that our customers are credit worthy.” - Shazia Khan, Founder and CEO, EcoEnergy


Photo Credit: EcoEnergy


Through Labs, Kiva has de-risked a wide range of companies working in energy access (Simusolar, SolarHome), agriculture (Cacao de Aroma, Mavuno Harvest) fintech (Farmerline, Nomanini), water & sanitation (Drinkwell, Jibu), health (LegWorks, Sevamob) artisans (Indosole, All Across Africa) and more.   

Lending Where No One Else Can Lend

What sets Kiva Labs apart? In short, Kiva does more deals supporting more social enterprises and at an earlier stage than most impact investors. Kiva  has averaged roughly 30 deals per year, whereas most lenders are able to do under 10 deals per year. How do we do this? Risk-tolerant capital from the thousands of lenders contributing as low as $25. This “crowd” allows Kiva to take risk other investors cannot, and therefore support three times the number of social enterprises. 

By providing loans under $100,000, Kiva is addressing a segment of the market other funders find too risky. Due to high costs associated with due diligence, most impact investors target investment sizes between $200,000 and $2 million to more mature social enterprises (often after de-risking by Kiva!).


Photo Credit: Drinkwell


Further, Kiva is able to leverage the power of the crowd for due diligence with, a platform for business professionals, retirees, academics, and graduate students to evaluate social enterprises. allows the wisdom of the crowd to form a consensus on social enterprises in our pipeline to better inform Kiva's investment decision-making and scale our underwriting capabilities efficiently and cheaply. If there aren’t enough deal-ready social enterprises for the impact investing field, we’re working on it.

What’s on the horizon?

Kiva Labs partners with technical assistance providers to couple catalytic capital with business management training and technical assistance, in partnership with the Mastercard Foundation. One example is a pilot with the African Management Institute (AMI), in which we placed 10 social enterprises from Africa to participate in a 12-month program. The Grow Your Business program works with enterprises to identify key weaknesses in the business that deserve the most attention and improvement. Preliminary results show high engagement and early signs of significant learnings from C-suite participants. After six months, 50% report they are already seeing tangible impact on business performance. Over the next two years, we plan to expand our technical assistance partnerships and deepen our understanding of effective enterprise supports. 

Long term, our goal is to scale the Kiva Labs program with customized systems designed for social enterprise lending and through To do this we’re raising external grants and introducing affordable crowdfunding platform fees to our borrowers. Along with the Mastercard Foundation, we are grateful for generous support from Vitol Foundation, BlackRock, Energy4Impact, Signify, and The Lemelson Foundation, which has enabled our impact thus far. We look forward to multiplying our reach, and invite you to join us! 

This blog was initially published on


Tags:  Access to Finance  Base of the Pyramid  Crowdfunding  gender lens investing  impact investing  Kiva  Mastercard Foundation  SDGs  SGB  Social entrepreneurship  social impact  Women 

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Comments on this post...

John Scicchitano, Ashesi University says...
Posted Friday, January 10, 2020
Kiva loans may in fact aggravate the missing middle problem, if not paired with entrepreneurial support!

Only 15% of South African start-ups are successful, despite having the second-highest ranking on the continent, according to the 2018 Global Entrepreneurship Index....start-ups who received support had a 50% higher chance of creating jobs, and these created an average of 5.8 jobs. They were also likely to create 60% more revenue and three times more likely to secure investments.
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