SGB Funding: Balancing Urgency and Risk during COVID-19

SGB Funding: Balancing Urgency and Risk during COVID-19

Social entrepreneurs and their small and growing businesses (SGBs) are the engine of sustainable, homegrown economic development in emerging markets. The need for urgent funding and non-financial support for SGBs during COVID-19 is clear. A study conducted by the Aspen Network for Development Entrepreneurs (ANDE) found that by June, an estimated 50% of SGBs in emerging markets had either failed or were at significant risk of failure. Most are still experiencing limited sales and shrinking cash flows with mounting operating costs, payroll, and debt repayment obligations.

Even during a crisis such as this one, funders committed to supporting SGBs still need to mitigate risk by performing due diligence that meets fiduciary standards and expectations of investors. For COVID-19 and future crises, how do we build SGB resiliency and mechanisms for emergency funding in times of pandemics, climate-related events, natural disasters, civil unrest, and other unforeseen circumstances? How can Kiva, together with our peers, mobilize support rapidly while balancing risk and limited resources?

This was the focus of the Solution Salon panel moderated by Luke Seidl, Kiva’s Senior Investment Manager for SGBs, and ProMujer Chief Operating Officer Carmen Correa at ANDE’s Annual conference (held virtually) on September 22nd.

The topic was inspired by, and is a continuation of, the work done by the COVID Response Alliance for Social Entrepreneurs, a coalition of 60 social change organizations, including Kiva, convened by the World Economic Forum and Schwab Foundation. In particular, we were guided by the Alliance’s action agenda report, “Why Social Entrepreneurs are Needed Now More than Ever.”

Kiva’s COVID-19 Response: Impact-First Collaboration

Kiva believes social entrepreneurs and SGBs play a vital role helping their communities weather and recover from the pandemic. In March, the Kiva Social Enterprise program launched our COVID-19 response initiative for international SGBs (non-US)[1], which included:

  • First, repayment moratoriums and longer grace periods for current borrowers.
  • Second, a Crisis Support Loan product–a zero-interest, low-fee, bridge loan for operating expenditures, working capital, payroll, and PPE.
  • Third, non-financial support, including a virtual technical assistance partnership with the African Management Institute and a partnership with Thomson Reuters Foundation to provide pro bono legal services to SGBs.


We have funded over $2 million in Crisis Support Loans directly to international SGBs in the past five months. However, we quickly realized how challenging it would be to perform due diligence and risk assessment, given the volume of requests and the urgency SGBs are experiencing — many have just a few months of runway, are facing layoffs and salary cuts, and have debt obligations to meet.

We found one way to address this challenge was greater, and deeper, collaboration with peer funders in our network. Investors tend to repeat due diligence that other investors have already completed, and with that in mind, we reached out to several funders aligned with Kiva’s mission and that have portfolios that overlap with ours. Our aim was to share pipeline, due diligence, and information regarding the needs of SGBs with the hope of catalyzing co-investment.

One example we are proud of is a collaboration with Mercy Corps Ventures and Omidyar Network’s recent spin-off PlaceFund to provide a loan finance vehicle to Meridia, a social enterprise providing land titling services for farmers in Ghana. Land rights stimulate financial inclusion, increasing farmer productivity up to 45% and empowering women with autonomy and 3.8x more earned income. Since 2015, Meridia has reached more than 60,000 beneficiaries, provided more than 13,000 land documents, and closed Ghana’s gender gap in land ownership. Kiva provided a $200,000 bridge loan that helped Meridia remain viable and secure an equity round, led by Mercy Corps Ventures and Place Fund. We shared due diligence and helped each other get comfortable with making our respective investments. As prior equity investors, both Mercy Corps Ventures and the PlaceFund team knew the company well and helped us understand the business model. Together, our flexible capital allowed Meridia to continue paying its staff, the company’s most valuable asset, and to prevent delays in serving their customers in the aftermath of COVID restrictions.

“Having Kiva step up and fill the void during the early days of the COVID-19 pandemic was a real game changer, and a great example of innovative finance helping drive tangible, on the ground impact. We hope to see more of these types of efforts in the months ahead” said Peter Rabley, co-founder and managing partner at PlaceFund.

New Ideas at the ANDE Summit for Supporting SGBs

We highlighted our experience with Meridia in the ANDE panel to spark thinking on how the ecosystem could work together to meet the demands of this moment in time. We were excited to hear inspiring new ideas emerge during the ANDE conference panel. These included:

  • Developing coordination mechanisms or platforms among funders, investors, and Entrepreneur Support Organizations (ESOs) that can serve as clearinghouses of standardized information on investible SGBs, central hubs for understanding necessary due diligence requirements, and allow for shared due diligence between investors to increase efficiency and avoid unnecessary duplication of efforts.
  • Facilitating more grant funding during crises by acting as a conduit between SGBs and networks of grantmaking foundations.
  • Utilizing revenue-based financing that delays repayment until normal business (or close to normal) picks up.
  • Lowering financial return expectations.
  • Electing to pass less burden on to the businesses by switching to a dividend model rather than a traditional exit.
  • Creating an SGB emergency funding syndicate of investors to share due diligence and co-invest and create a cross-donor grant facility that is activated specifically during crises to de-risk investments.
  • Utilizing technology tools like Slack or Google Sheets to share pipeline, contacts, and due diligence.


We want to continue exploring these ideas with other funders, investors, and accelerators and welcome more collaboration with our peers and local organizations. Kiva believes non-financial support in concert with flexible capital is critical before, during, and after a crisis situation. Technical assistance and business management training helps strengthen SGB resiliency and mitigate risk for investors. To that end, we are striving to form more strategic partnerships with local ESOs and technical assistance providers.

The unfortunate reality is crisis events occur more frequently than we think. We must build an ecosystem of collaboration that allows us to rise to the occasion and support SGBs from survival to scale. If your organization is interested in exploring these ideas or partnerships with Kiva, please don’t hesitate to contact us at

[1] Kiva’s COVID-19 response for U.S. businesses is a separate program.