Giving Credit Where Credit is Due

At one point in his life, Vaughn Tiedeman was just a guy with a few kayaks and a dream.

Then along came Kiva, and today, the 40-year-old Hopatcong resident is an entrepreneur, the owner of Living Adventure Tours, a business that provides participants the chance to make new friends while taking part in unique outdoor pastimes ranging from snowshoeing to rock-climbing to ballooning.

Kiva is a unique loan program that provided Tiedeman with $5,000, at no interest, to grow his business, a loan Tiedeman was unable to obtain from traditional commercial banks -- and for a reason that may come as a surprise.

“I have exceptional credit. I own my home. The reason I could not get a loan was that I had zero cash flow. I was putting it all back into my business.”

Tiedeman was just one of several businesspeople in the city Monday for the launch of Kiva City Newark, a partnership designed to give aspiring business owners that little boost of start-up capital that would otherwise be unavailable to them, in most cases -- unlike Tiedeman’s -- because of low credit scores.

“We believe that credit scores are not the basis for loaning to a business,” said Premal Shah, the co-founder of Kiva, which works with “micro-lenders” and businesspeople across the United States and around the globe.

Shah, speaking during a press conference at Coqueta Fashion on Jefferson Street, said the median credit score of  Kiva loan recipients is about 595, well below a solid-gold score of about 775 or higher. Manyhttp://www.ritaallenfoundation.org/ people with scores in the lower range, Shah said, have little established credit history because they are immigrants to the United States.

But Shah is quick to add, however, that the repayment rate would be the envy of any Main Street banker -- nearly 99 percent.

Shah also said that while prospective borrowers aren’t assessed by traditional means, Kiva does check references, including speaking to landlords and others to get a sense of an applicant’s level of responsibilty before awarding what Shah described as a “character loan.”

Kiva Newark, which has partnered with New Brunswick-based The Intersect Fund, a nonprofit that provides loans of up to $25,000, and the Rita Allen Foundation, offers “crowdsourced” loans--- funds provided by people who, online, kick in amounts as little as just a few dollars -- as well as loans from nonprofits. Individuals seeking to make a loan can also connect with specific businesspeople via Kiva’s Web site.