Posting Language
Title
Authorize a contract for managing revolving funds for matching crowdfunded small business loans for Austin Economic Development with Kiva Microfunds, for an initial term of three years with up to four one-year extension options in an amount not to exceed $432,000. Funding: $432,000 is available in the Operating Budget of Austin Economic Development.
Body
Lead Department
Austin Financial Services.
Client Department(s)
Austin Economic Development.
Fiscal Note
Funding in the amount of $432,000 is available in the Fiscal Year 2025-2026 Operating Budget of Austin Economic Development.
Procurement Language:
Professional Service.
MBE/WBE:
Professional service contracts are exempt from the City Code Chapter 2-9B (Minority-Owned and Women-Owned Business Enterprise Procurement Program); therefore, no subcontracting goals were established.
For More Information:
Direct questions regarding this Recommendation for Council Action to Austin Financial Services - Central Procurement at: FSDCentralProcurementRCAs@austintexas.gov or 512-974-2500.
Additional Backup Information:
Kiva Microfunds (Kiva) is a San Francisco-based 501(c)3 non-profit organization founded in 2005 with a mission to expand financial access to help underserved communities thrive utilizing a peer-to-peer lending model to offer loans up to $15,000 with 0% interest, zero fees, and no collateral required.
Peer-to-peer lending is a method of raising capital for a business that pools small dollar loans (as little as $25) from multiple individual lenders to form a larger loan up to $15,000. Kiva conducts a due diligence review, including a soft credit inquiry to verify application information; however, the score is not the determiner of final credit decision. Kiva does require applicants to successfully identify a minimum number of private lenders subject to the total loan request (typically friends, family, or customers) as part of its social underwriting process.
Since its inception of lending to US-based small business owners in 2011, Kiva’s impact in the US has totaled over $83M with 10,900+ unique borrowers served. 66% of Kiva’s US loans are distributed to women, and three out of four Kiva loans are made to BIPOC-owned businesses. The City launched as a new Kiva US Hub in March 2026 as the City Manager’s Priority Goals identified the need to develop new access to capital programs for small businesses. City staff are trained to serve as a designated Capital Access Manager to provide technical assistance and hands-on support to Kiva applicants.
Kiva offers a loan match program and waives associated fees for existing Kiva Hubs, allowing a “sponsor” to deposit a fixed amount of funding into a match account, with the sponsor setting conditions for when loan match funds can be used. The Kiva platform will then match applications that align with these conditions. The result is both faster loan funding and a higher rate of fully funded loans that meet sponsor goals. The matching funds are revolving, so as borrowers pay back, funds are relent to new borrowers, magnifying the impact of the initial investment.
Austin Economic Development will apply funding into three targeted loan match funds: Childcare Businesses Fund, Business Interruption Fund, and Small Business Skills Graduate Fund. Operationally, when an application from a business that meets one of the matching funds described, they will be eligible to receive up to 2:1 match ration. For example, a Kiva loan applicant with a loan goal for the maximum dollar value of $15,000 will be matched with two dollars for every dollar raised by the Kiva platform. In this example, the applicant must raise $5,000 total to be matched $10,000 through matching funds to reach the loan goal of $15,000.
The match funds will result in the ability to fund loans at a faster rate and achieve a higher rate of fully funded loans. The matching funds are revolving, as borrowers pay back, funds are loaned to new borrowers, magnifying the impact of the initial investment.
Staff will conduct an annual fund expenditure review and administratively reallocate funding distributions based on utilization levels and prevailing market needs.
Austin Economic Development estimates 200 microloans will be funded and matched over the full contract period of seven years, creating a $1.4 million impact to the small business community.
This is replacing a contract expiring January 15, 2027. Kiva Microfunds is the current provider of these services.
If this contract is not approved, Austin Economic Development would lose access to Kiva's loan-matching platform when the current agreement expires on January 15, 2027, halting matched microloan funding to childcare businesses, construction-impacted businesses, and small business skills certificate awardees, and interrupting the City's ability to leverage revolving funds to expand affordable, collateral-free credit access for underserved small business owners.
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Contract Details: |
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Contract Term |
Length of Term |
Contract Authorization |
|
Initial Term |
3 years |
$432,000 |
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Optional Extension 1 |
1 year |
$0 |
|
Optional Extension 2 |
1 year |
$0 |
|
Optional Extension 3 |
1 year |
$0 |
|
Optional Extension 4 |
1 year |
$0 |
|
Total |
7 years |
$432,000 |
Note: Contract Authorization amounts are based on the City’s estimated annual usage.