A New Microlending Fund for Women Entrepreneurs

Kiva and skin-care company Dermalogica launch a campaign to promote microloans for women in the U.S. and overseas

By John Tozzi

(Corrects to clarify that $125 million in the fifth paragraph refers to completed loans.)

When Jane Wurwand learned about microlending site Kiva, the idea of funding small loans so mostly women borrowers could start businesses resonated with her. The 52-year-old founder of Carson (Calif.) skin-care product maker Dermalogica started 25 years ago with $14,000 and built a business with customers in 87 countries and more than $200 million in annual revenue.

Dermalogica is donating $500,000 to help fund microloans to women through Kiva, a nonprofit website that connects donors with microfinance institutions, mostly in developing countries, the companies said today. Wurwand just stepped down as chief executive officer of Dermalogica to focus her attention on the microlending campaign. She plans to enlist her network of distributors and thousands of spa and salon owners who sell Dermalogica’s products, and ultimately her consumers and other businesses, in the cause. “It’s so authentic to our industry,” she says. “Every [spa and salon owner] has said it feels like their story. Each of them started with a small amount of money and built their success through that. They know as a woman what it means to be financially independent.”

The project, called Financial Independence Through Entrepreneurship (FITE), will involve promotions on five of Dermalogica’s top-selling products, including skin cleansers, microfolients, and eye creams, that consumers can redeem online to contribute $1 to a Kiva loan. Wurwand hopes consumers will add to the credits with donations of their own, and aims to facilitate microloans to at least 25,000 entrepreneurs in two years. Unlike on Kiva’s main site, loans made through FITE will only go to women. When people fund a loan on the site, starting at $25, they choose what country and what industry their money goes to. Kiva will then choose the borrower and send donors e-mail updates on the entrepreneurs who receive their funds.

Kiva also hopes to use the site to get other companies and individuals involved in promoting its service. “We’re creating a platform that can be open, that other organizations, other individuals, other influencers can join by participating themselves and engaging their network,” says Bennett Grassano, director of development for Kiva in San Francisco. The FITE project is the first time Kiva will be promoted on consumer packaged goods, Grassano says.

Microfinance Under Scrutiny

The microfinance model, and particularly for-profit lenders seeking returns for investors, has come under increased scrutiny in recent months in India and other countries, and in October officials in the Indian state of Andhra Pradesh put restrictions on the practice in the wake of suicides by some borrowers. Still, Grassano says microloans appropriately administered can help entrepreneurs in developing countries. Of the nearly $125 million in completed loans Kiva has funded, 98.91 percent of them have been repaid by the end of the loan’s term—a rate that includes guarantees on defaulted loans paid by some of Kiva’s partner lending institutions.

Each of Dermalogica’s 53 distributors has formed teams of employees to make loans through Kiva. The company has sent marketing kits for the campaign to the 25,000 salons and spas that sell its products, Wurwand says. Some 60 percent of the company’s sales are international. In countries including Malaysia, Cambodia, Vietnam, and China, Dermalogica customers will be able to fund loans to their fellow citizens.

Lori Paley, owner of the 15-employee Aromatique Skin and Body Care in Claremont, Calif., has made two $25 loans through Kiva that helped fund women in Cambodia, one to buy inventory for her used clothing store and another to start a home-based salon. She plans to make more loans and to hold events to promote the project—and the Dermalogica products that support it—to customers. Paley also recognizes how important credit is to entrepreneurs starting out. She says she had trouble getting financing to purchase her business 14 years ago. At the time, Paley says, “people were talking up that the banks were looking for women to loan to. That wasn’t the case. It wasn’t so easy.”

Tozzi covers small business for Businessweek.com.