The Catch-22 of seeking finance as a startup — and how Kiva loans helped two women grocery store co-workers become co-founders

Despite facing gendered obstacles throughout their business ownership journeys, like unequal access to finance, women continue to see business success and are more likely to repay their loans. Learn how one women-owned small business overcame the struggle of getting started.

Written by Kaylin Lang

The story begins in a Whole Foods Market in Columbus, Ohio, where Erin and Leigh-Ann work. They quickly become friends and bond over stories about their curly hair challenges. One day, half-jokingly, they mention starting their own hair care line. Fueled by their desire for their products to be natural, cruelty-free, and sustainably sourced, they soon begin concocting recipes in their kitchens.

“When I first started at Whole Foods, I knew that I wanted to ultimately create a product that met the criteria of the ingredients list [for a product] to be in Whole Foods," says Leigh-Ann.

After several months of research and some failed recipes – tested on themselves and on family and friends who graciously offered to be “test dummies” – they officially established the 2 Girls with Curls product line in 2013.

What Leigh-Ann called a whim later became a reality in a wonderful and full-circle way: 2 Girls with Curls products landed on shelves in Whole Foods Markets in Ohio, Michigan, and Virginia.

“We both still worked there [at Whole Foods] when our products initially launched [...]. Just as we were proud, everyone who we were working with was also very proud, and they would tell all the customers to shop our products.” – Leigh-Ann

The journey was not easy, nor was securing the funding necessary to get things up and running. And although they wish they had learned about Kiva sooner, they reflect with gratitude on the process. The connections they made over those formative years, the lessons they learned, and the opportunities that were presented to them during that time ended up being pivotal – not only to the growth and success of their business but also to their personal development as first-time entrepreneurs.

The missing piece of the startup funding puzzle

Finding funding as a startup is inherently challenging – potential lenders and investors are looking for a history of financial stability and success, but startups do not yet have a track record. Erin and Leigh-Ann inevitably faced these barriers when seeking capital during the early years of 2 Girls with Curls.

“When you’re looking for funding as a startup, there’s so much that goes into considering if you’re going to qualify. So much of it is the collateral that you have, but we didn’t have much as far as collateral went. It’s like you need to have money in order to get money. It’s a big Catch-22.” – Erin

Leigh-Ann adds that, for particular types of financing, they would have needed to already be profitable or show a specific amount of sales in order to catch the attention of potential funders.

Such seemingly counterintuitive expectations of the startup’s financial position prompted 2 Girls with Curls to explore alternative options.

“We didn’t know where to start or what to do. We went the typical route in the beginning - reached out to a bank, got information from them [...]. We also didn’t want to be in the hole for a huge loan, and then if things didn’t work out, then we’d just be trying to pay it off or we’d have to file for bankruptcy. We were trying to look at it from a lot of different angles.” – Erin

Their patience and intentionality in this search for capital was later rewarded. At the time, Erin and Leigh-Ann were working with an advisor from SCORE — a nonprofit that connects volunteers providing free, expert mentoring, resources and business education to entrepreneurs nationwide.?He was always connecting them with potential financing opportunities, and encouraged them to attend a funding seminar for small businesses that was happening in Columbus. Erin will forever be grateful she attended, she says, as it was there that she first learned about Kiva.

“I was like ‘what, no interest? And crowdfunded? This is great!’... And we didn’t have to get all this paperwork together and show all of this evidence of what we were doing and how we were doing it. That’s where it was kind of like a breath of fresh air. We can just apply for this and people actually will support us based on our story.” – Erin

Supporting people based on their story is at the heart of what Kiva stands for and is fundamental to the lender-borrower connection which Kiva strives to facilitate.

The Kiva U.S. process represents character-based lending, a type of lending that promotes a community-informed understanding of who is considered investable by empowering lenders to participate in evaluation and decision-making. In traditional financial institutions, lenders make lending decisions based on purely financial data (credit scores, cashflows, collateral, etc.), with widespread bias often impacting perceptions on who is considered “investable”.

At Kiva U.S., however, a process known as social underwriting promotes lending decisions that are made based on the strength of a borrower’s character and standing in their community. ‘Social underwriting’ allows borrowers to utilize a Private Fundraising Period where they request funding from within their community to ‘underwrite’ their loan rather than relying on collateral.

2 humbling crowdfunding experiences for 2 Girls with Curls

Despite initial hesitation about crowdfunding, 2 Girls with Curls found success with the Kiva platform – not once, but twice. They received their first Kiva loan of $7,000 in March 2018, and three years later, in March 2021, they received their second Kiva loan of $7,500. And not only did they find success, but they also found renewed confidence. They found community near and far. They found people who believed in their vision.

“Not only did they [our friends and family] support us, but you also have these random people that you don’t even know - these perfect strangers - who are supporting you as well. So I think that was a little humbling for us in a way, because we didn't expect people to be in our corner as much.” – Erin

Erin and Leigh-Ann appreciated the simplicity of the Kiva process, but perhaps even more noteworthy to them was how the process made them feel. “It’s a happy experience,” says Leigh-Ann. “It came at a time when we desperately needed a happy experience, that’s for sure.” It was the breath of fresh air that they needed, when they needed it.

“Especially after coming off a couple of rejections… I think everything about this process was very positive for us. It just made us feel good. And that’s really interesting to be able to say about a loan process - that it was easy. It was a perfect fit for us.” – Leigh-Ann

The Kiva loan prompted changes that would benefit their business for years to come

The Kiva loan they are currently repaying was the lifeline 2 Girls with Curls needed during the pandemic. During that time, certain ingredients saw significant price increases, and other ingredients were unavailable altogether. The Kiva loan funds gave Erin and Leigh-Ann leverage to find a different, more cost-effective manufacturer. Loan funds also went towards research and development for product enhancements as well as marketing.

Reflecting on how the Kiva loan has changed things for them and for 2 Girls with Curls, Leigh-Ann emphasizes how it – perhaps because it was simultaneously their first and only source of external business financing – prompted them to make certain fundamental changes that would benefit their business for years to come.

"It was like the kickoff for us to really feel like we didn’t have the imposter syndrome of running a business but rather that we were truly running this business. I think it gave us the motivation and the confidence to get ourselves organized and start functioning like a normal and good-functioning business.” – Leigh-Ann

This sentiment of increased confidence aligns with what Kiva already knows to be true; namely, that 70% of Kiva U.S. borrowers report an improvement in their business confidence as a result of going through the Kiva process.?

Erin and Leigh-Ann also feel a lot of gratitude, even for things not working out as they had originally hoped. And despite the big learning curve and slow process, their products are out in the real world: on the shelves of Whole Foods, in local salons, on their website, and on Amazon (coming soon!).?

“Positive feedback that we get reminds us of why we initially set out to do this and that’s very rewarding, as well,” says Leigh-Ann.

See Erin and Leigh-Ann share their experience

What’s next for the co-workers turned co-founders

Erin and Leigh-Ann embody humility and groundedness, but these can coexist with their big dreams for their small business. They would like to hire someone to support marketing and operations. They hope to develop and carry a baby care line, a men’s care line; scalp care, oil treatments, and more.

“The list just gets longer every time we meet and talk,” Leigh-Ann shares with a laugh.

"What I’m most proud of is that we’re still going. Owning and running a business is definitely a challenge. There was a big learning curve for us when we were starting off. It’s been 10 years at this point and we’re still running. So I think that’s what I’m most proud about: being able to share our products, our story, our vision with everyone who will listen.” – Erin

You can support another woman-owned business with as little as $25 here.

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This article was originally published on the Kiva blog.