When the microloan organization Kiva designated Milwaukee as a Kiva City in 2015, it was a victory worth celebrating.

It was never a surefire bet that the San Francisco-based nonprofit that dispenses zero-interest, crowdfunded loans through the internet to economically disenfranchised entrepreneurs worldwide would set up shop in the Brew City.

At the time, Kiva had recently brought its services stateside after starting out as an international microloan agency. But the organization, established in 2005, wasn’t exactly knocking on Milwaukee’s doors.

Instead it was cities like New Orleans, Detroit, Little Rock, Ark., Newark, N.J., and others where Kiva had already set up shop in the U.S. Read the full Milwaukee Business Journal article here.

But Wisconsin’s largest city? The thought hadn’t crossed the minds of Kiva operatives — not until Wendy Baumann, president of Wisconsin Women’s Business Initiative Corp. (WWBIC), planted a seed with Kiva organizers.

Baumann, who had attended global micro-credit summits, had become increasingly familiar with and fond of the Kiva program over the years. So when she met Jonny Price, senior director of Kiva U.S., she approached him and enthusiastically suggested Milwaukee as an ideal candidate for the initiative.

“He was a little standback-ish, because he said ‘Milwaukee is really not on our radar screen,’” she recalled.

But although Kiva may have been hesitant at first, it was clear that WWBIC, in partnership with the city of Milwaukee, was determined to erase any of the organization’s lingering apprehensions. In March 2014, talks about the Kiva program between WWBIC and the city of Milwaukee got off the ground, trustees for the program were quickly brought on board and the necessary funds were raised expediently, with the city of Milwaukee pitching in $25,000 to the program through the 2015 budget.

And less than a year later, the fruits of labor materialized for these groups. Kiva launched in February 2015 in Milwaukee as the 11th Kiva city in the U.S. and the second in the Midwest.

A little more than a year later, the program is yielding robust results, with Milwaukee beating out cities like Chicago and Detroit as the No. 8 metro area in the amount of Kiva loans issued.

Numerous local restaurants and cafes, tax service businesses and farms have been recipients of loans ranging from $450 to $10,000. So far, roughly $450,000 in loans have been given to more than 80 entrepreneurs and small businesses in Wisconsin.

How Kiva works

For a business owner or entrepreneur to qualify for a zero-interest Kiva loan, they have to go through a thorough application process that requires the business owners to raise a portion of the funds they are requesting from people they know in a limited period of time. Loans are capped at $10,000 and the average amount in Wisconsin is about $5,500.

This initial phase is considered the private phase of funding and applicants typically raise this money from friends and family, said Gwen Benner, who serves as small business adviser to Kiva loan recipients.

“That’s kind of their symbolic test of their ability to work toward their goal — not only their borrowing goal, but their business goal. It’s going to take a lot of credible work to tell their story and convince people they’re worthy of an investment,” Benner said.

After enough capital is raised in this phase, the funding goes public, meaning people from around the world can assess what this entrepreneur is doing and whether the cause resonates enough with them to want to loan them money. People can lend as little as $25 to businesses at www.kiva.org/milwaukee to help them reach their goal.

It has a similar sentiment to internet platforms like Kickstarter or GoFundMe, but all the money invested by various actors will be paid back and lenders won’t receive any incentives from businesses in return for their pledged money.

Kiva aims to provide fiscal relief for those economically disenfranchised entrepreneurs that find normal avenues of financing unreachable. As a result, the pool of Kiva loan recipients tends to skew female and those in racial minority demographics.

“We know that the No. 1 need entrepreneurs express is capital and Kiva is serving a segment of the entrepreneurial population in Milwaukee and Wisconsin that will never qualify for conventional capital, but we’re getting them on the ladder toward doing that,” said Martha Brown, deputy commissioner with the Milwaukee Department of City Development.

Compost Crusader

Melissa Tashjian is the first Milwaukee entrepreneur to get a loan funded through Kiva for her business, Compost Crusader, which helps businesses divert their organic material from landfills through composting.

It’s a title she carries with pride, especially as she’s watched her Bay View business, which launched in 2014, grow over the past two years. In her first year she took a loss, broke even in 2015, and is on a path of profit for 2016. The number of Compost Crusader clients has doubled each year. Tashjian started with 15 in 2014 and currently serves 60 customers.

That growth is something she attributes, in part, to Kiva, which helped Tashjian in the early days of her business with a $5,000 loan. She used those funds to purchase a reliable source of compostable bags for customers.

“It really helped me create a better infrastructure,” she said of the Kiva loan.

And it worked: She paid the loan off within 10 months and then quickly applied through Kiva again — this time for a $10,000 loan that would help her purchase a larger truck.

Currently, with the larger truck, Compost Crusader is hauling 110,000 pounds of compost each month, more than she ever was before. The larger vehicle allows her to transport more material in each route and increase her profit margin.

Like many Kiva recipients, Tashjian is considered to be ineligible by many financial institutions for traditional commercial loans needed to build her business. She said she recently was denied a bank loan because she lacked enough capital or collateral.

“I’ve been a waitress for six years, so living on a waitress’ salary, you don’t show a lot of income,” she said.

In 2015, Compost Crusader recorded $93,000 in gross revenue. In 2016, Tashjian, who employs one other person in addition to herself, expects to boost revenue enough to start paying herself.

Milwaukee Blacksmith

Since she started her business a decade ago with her husband Kent, Shannon Knapp estimates that she’s applied for 10 commercial loans.

But each time she was rejected.

It’s not because her business, Milwaukee Blacksmith in the 3rd Ward, isn’t attracting clients or interest. In fact, the Knapp family business will be the subject of a new History Channel television series called “Milwaukee Blacksmith” that premieres Aug. 23.

Rather, it’s the Knapps’ credit history that have stymied their access to capital.

“I have six kids, Kent and I have been together since we were 17, we’ve had a lot of bumps in the road,” Shannon Knapp said. “My credit is not pretty. People were not willing to help us. You can’t walk in like you used to and get a loan on your name and if you make mistakes personally, they assume you’ll make mistakes in business.”

So, when they heard about Kiva last year, the Knapps applied for a $5,000 loan to purchase a van large enough to carry all their blacksmithing equipment and children. Without the loan for the van, the Knapps would have difficulty traveling to craft shows and selling their goods or demonstrating their techniques at events like the Newaukee Night Market.

“You don’t even ask (for a loan) until you’re in a pinch, so for Kiva to move so quickly and get you funded and keep the payment so reasonable, it has just been huge for us,” Shannon Knapp said.

That loan is now paid back and the Knapps are applying for a second loan — this one for $10,000 — which will fund new machinery and tools for Milwaukee Blacksmith. The equipment will help speed up the completion rate of custom jobs, and permit Kent Knapp and his sons, who work in the shop with their father, to take a reprieve between jobs and follow their own creative blacksmithing pursuits.

Currently, turning over products is the priority, but there needs to be time set aside so “the guys can just make what they want to make,” Shannon Knapp said, especially for her youngest son, Oscar.

“That boy swings a hammer like no one else,” she said. “He slings a sledgehammer like most people swing a nail hammer.”

Voluptuous Secrets

Theresa Gadzik has a similar story to that of the Knapp family and Tashjian. Like the other Kiva entrepreneurs, Gadzik, who owns the lingerie shop Voluptuous Secrets in Milwaukee, was not the ideal borrower for a financial institution.

The idea for the business emerged after Gadzik personally struggled to find larger brassieres and lingerie in typical department stores and mainstream retailers. Gadzik consulted with other full-figured women and realized they experienced similar problems in shopping.

So after she was laid off from her job, she launched Voluptuous Secrets and now helps curvy women find proper-fitting undergarments and lingerie.

She started Voluptuous Secrets, 1740 N. Dr. Martin Luther King Jr. Drive, in 2002 with financing help from her husband.

But Gadzik and her husband later divorced, bills piled up and Gadzik became stuck financially. Her application for a commercial loan was rejected because she lacked sufficient collateral, so after learning about Kiva through WWBIC she applied for a $10,000 loan to finance new inventory and an advertising and marketing budget.

She’s on track to repaying that loan within the next couple of years, she said. Kiva gave her what she needed at the time — a loan that provided her with fiscal footing, but didn’t strangle her financially with sky-high interest rates.

“When I was in a jam,” she said, “they helped me get out of my jam.”