Kiva vs. Accion: Which small business lender is right for you?

Kiva and Accion are two non-traditional business lenders. They’re nonprofits that focus on microloans for small businesses. If you have a new company, are a business owner with bad credit or are in an underserved community, they can be an especially good source of funding to grow your business.

We’ll help break down the key differences between these lenders to help you choose the right business loan for your needs.

Kiva vs. Accion at a glance

Both Kiva and Accion offer small business loans to startups and other types of businesses that might not qualify for traditional loans. So choosing the right one means looking closely at their key differences.

Kiva business loans

Kiva is a microlender that offers 0% APR loans. That means you won’t have to pay interest on the money you borrow when taking out a Kiva business loan. This makes it a great choice for companies that are just starting out and need funding to cover initial costs or expand. It functions like a mix of crowdfunding and peer-to-peer lender, sourcing funds from family and friends of the business owner and others looking to help startups.

There are some disadvantages to consider. Kiva microloans have small loan amounts, only going up $15,000. You’re also not guaranteed to get a loan, thanks to the crowdfunding model. You’ll have to help source your own funding. Even if the loan is funded, it likely won’t happen fast.

Kiva also requires a personal guarantee, adding some risk to its loans.

Pros

• Minimal approval requirements
• No interest charges and no fees
• Minimal documentation required

Cons

• You have to help source your crowdfunding
• Low loan limit
• Personal guarantee required

Accion business loans

The Accion Opportunity Fund offers business loans focused on underserved communities. It states that more than 90 percent of borrowers are women, people of color or from low-to-moderate-income communities.

It works as a more traditional lender than Kiva, offering loans directly rather than helping with crowdfunding. Accion business loans offer business owners access to up to $100,000 in funding with repayment terms of up to 60 months. The lender even helps manage a business grant for minority business owners.

Its interest rates range from 5.99 percent to 17.99 percent. It’s rare to find such low rates accessible to startups and business owners with bad credit. Another key aspect of Accion’s loans is the mentoring and support it offers. Borrowers can attend free mentoring sessions and webinars to gain more business education. Accion states that its clients have a 96 percent business survival rate compared to the 50 percent national average, showing the benefit that this mentoring provides.

Pros

• Low interest rates
• Mentoring and training opportunities
• More accessible than traditional loans

Cons

• Loan amounts only go up to $100,000
• Not available in MT, ND, SD, TN or VT

How to choose between Kiva and Accion

Kiva and Accion serve similar communities. But Kiva is aimed more at early-stage startups who have small funding requirements, while Accion is better for slightly more established companies.

Choose Kiva for interest-free business loans

Kiva, unlike Accion, does not charge any interest or fees. That makes Kiva the ideal lender for companies that want to keep costs as low as possible. Even Accion’s minimum rate of 5.99 percent can add up over time.

Choose Accion for large loan amounts

Accion loans let borrowers access as much as $100,000, which is far more than Kiva’s microloans of $15,000. These loans also come with helpful business loan resources, including mentoring.

Choose Kiva for startups and bad credit

Kiva small business loans have no time in business requirement, credit score or other requirements to qualify for its loans. Even the most accessible lenders typically require six months in business and a credit score of 500 or higher. If you’re just starting your company or have a low credit score that won’t qualify for other types of loans to help start a business or cover working capital needs, Kiva is a strong choice.

Choose Accion for relaxed eligibility requirements

Business owners who struggle to gain access to traditional types of financing may have better luck with Accion than with banks and other online lenders. It uses an underwriting process that looks at more than just your credit score. The lender’s relaxed eligibility requirements will appeal to startups, business owners with bad credit and business owners in underserved communities.

Alternatives

Kiva and Accion are both solid lenders for newer companies and businesses in historically disadvantaged communities. But they aren’t the only options.

For example, Lendistry is a Community Development Financial Institution focusing on lending to minority groups. It offers much larger loans, with minimums starting at $250,000.

You might also consider a business line of credit, which offers a revolving line of credit that you can continue to use for a certain period. Limits don’t typically get as high as Accion’s upper loan limit of $100,000, and if you need high-risk financing, interest rates will be far higher than Accion’s low-interest loans or Kiva’s zero-percent loans.

Business credit cards may also help you start a business or cover cash shortfalls. You’ll also avoid interest charges if you pay the balance off at the end of each statement period. Plus, credit cards offer the opportunity to earn cash back or other rewards.

SBA loans

SBA loans are insured by the government, helping lenders limit their risk and offer larger loans to business owners who struggle to gain access to traditional loans.

SBA Community Advantage loans are specifically aimed at underserved communities. They provide access to SBA 7(a) loans for up to $350,000. These loans can help buy equipment or real estate, serve as working capital loans or assist with other business needs. And rates are capped, making them a more affordable option for business owners who won’t be offered the best rates with other loans.

SBA microloans are another option, offering loans up to $50,000. According to a 2022 press release, over 76 percent of these loans went to underserved communities, which include minority business owners, women and veterans.

Bottom line

Kiva and Accion both offer low-interest business loans to underserved businesses, but Kiva focuses on smaller amounts and newer companies, while Accion aims its loans at slightly more established businesses with bigger financing needs.

Before applying for a loan, take the time to consider your options and compare the costs of different loans. Finding a good deal could save you a lot of money in the long run.

Frequently asked questions

• Is there a minimum credit score for Kiva?

  No, Kiva does not have a minimum credit score. It also has no requirements for collateral or business revenue.

• What is the minimum credit score for Accion?

  Accion does not state a minimum credit score requirement but uses underwriting techniques focusing on more than just your credit score.

• What is the maximum amount you can borrow with Accion?

  Accion offers loans for amounts up to $100,000.