Kiva small business loan review: microloans of up to $15,000

Kiva is a nonprofit peer-to-peer lender that places a premium on popularity. Unlike most lenders, which use credit scores, accounting statements and other traditional gauges of financial success to decide who gets a loan, Kiva believes that if you can recruit a group of supporters on your own, then you have enough social capital to access its wider network of more than 2 million partner lenders.

It's a novel concept that naturally appeals to the entrepreneur who lacks cash but is rich in friends. But is it right for you? Here's more on what you need to know about Kiva, including the application process, pros and cons, and the maximum amount you can borrow.

You start the loan process with Kiva by applying online. You'll have to provide some basic information on your business, such as where it's located, its name, how much you want to borrow and more. You'll also need to eventually build a public profile for yourself with Kiva, which includes a photo of you and a short summary about your business.

Kiva doesn't have a minimum credit score requirement for applicants, so it's a much more accessible option for those who may be worried about qualifying with a lower credit score. That said, you have to meet certain criteria for Kiva to consider your application, including:

• You and your business are based in the United States but not in Nevada or North Dakota
• You're over 18 years old
• Your business doesn't involve any multi-level marketing, direct sales, gambling, illegal activities or investing in stocks and securities
• You can't currently be in bankruptcy, foreclosure or under any liens

After you apply, Kiva gives you 15 days to raise money from people you know to help prove your venture's importance to a community. The number of people Kiva requires for this initial round of fundraising varies from 5 to 35, depending on the size of the loan and other factors.

Once that initial 15-day period ends, your campaign gets shared with Kiva's network of lenders that can pledge money to your business. You get 30 days to fundraise additional proceeds. Then, you'll have up to 36 months to repay the loan.

One to six months after receiving the loan, you'll begin making monthly payments directly to Kiva, which will then disburse the money to all of the lenders who supported your campaign.

Borrowers can crowdfund up to $15,000 through Kiva. Such small funding amounts are known as microloans. By contrast, other lenders typically let business owners apply for as much as $500,000 to $1 million. Some lenders may even let you apply for up to $5 million.

Since it's a nonprofit, Kiva offers 0% interest on loans for U.S. small businesses. Kiva lenders also don't receive interest payments for the loans they fund. However, according to the Kiva team, if you're looking to borrow money through Kiva's international loan program, you may be charged interest by the company's Lending Partners — microfinance institutions and other organizations in Kiva's network that disburse the loan and collect payments. While the Lending Partners collect interest, Kiva does not.

The average global interest rate for microfinancing is about 35%, but rates can vary by region, according to the Georgetown Public Policy Review. Kiva says it aims to work with microfinance institutions with a social mission toward the underserved and that don't charge unreasonable interest rates.

Consider the following pros and cons before you apply for a Kiva microloan.

If you're unsure whether Kiva is right for you, here's how it compares to other small-business lenders.

Kiva vs. Credibly

Unlike Kiva, Credibly is not a peer-to-peer lender. It offers small business term loans with funding amounts as high as $600,000. Kiva's maximum amount is significantly lower at $15,000, which means Credibly is the better option for larger loans.

Kiva doesn't have a minimum credit score requirement, but Credibly does: Borrowers should aim to apply with a credit score of at least 500, which still makes Credibly fairly accessible to those with lower credit scores.

Kiva vs. OnDeck

OnDeck is another traditional term loan lender — it offers loan amounts as high as $250,000, which is lower than what Credibly offers but still higher than Kiva's maximum. Kiva does offer a longer repayment term than OnDeck: 36 months as opposed to 24 months. This can be a significant selling point if you're prioritizing longer repayment options for a smaller monthly payment.

Another big difference is that OnDeck can get applicants funded as soon as the same business day (only available in certain states and for loan amounts of up to $100,000). Again, Kiva's turnaround time is much longer since you're crowdfunding your loan, so keep this in mind if you need funding in a pinch.

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every small business loan review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of small business products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.

Catch up on CNBC Select's in-depth coverage of credit cards, banking and money, and follow us on TikTok, Facebook, Instagram and Twitter to stay up to date.