Former President Bill Clinton encouraged Arkansans to support community businesses Friday as he helped introduce a nontraditional loan program in Little Rock.
At the Clinton Presidential Center’s Great Hall, he spoke about a pilot program in the city for the “crowdsource” funding nonprofit Kiva, which has helped about 1 million businesses around the world get more than $143 million in small loans since 2006.
“This is the wave of the future, and it might as well be put to use rebuilding the American economy,” Clinton said of the program. “Five years from now, you’ll be amazed at what happened as a result of this event today.”
Kiva usually works through microlending organizations that agree to sponsor borrowers for the program.
The borrowers write summaries of their business plans, request specific amounts of money and describe the funds’ proposed uses. They agree to pay it back, interest free, in a certain amount of time.
Members of the public then pledge to fund the businesses in increments of about $25 until the funding goal is met. That’s the crowdsource. Borrowers’ monthly repayments are distributed back to the lenders.
Kiva City Little Rock is a little different because small businesses won’t need the backing of microlending institutions to become borrowers.
Instead, with support from Visa and Accion Texas and Delta, Kiva has been scouting the community to find nonprofit organizations, successful small businesses, community representatives and other anchors to vouch for borrowers and their businesses.
“We are getting back to a system of character-based lending,” Kiva founder Premal Shah said. “When we recognize potential in others, powerful things can happen. One thing I’m excited about is this [program] relies on something credit scores don’t capture - and that’s character.”
The Little Rock portion of the website, kiva.org/littlerock, started running earlier this week, and some businesses already have received 10 percent, 15 percent or even 20 percent of their requested loan amounts.
About 22 Arkansas businesses from places such as Cabot, Hot Springs, Fayetteville and Little Rock are making pitches for help with expanding their operations. There are 15 businesses and nonprofit organizations sponsoring the potential borrowers.
Kent Walker is one of the people hoping to get a loan. As of late Friday, he had been funded for 18 percent of his request for $10,000.
“I keep hitting the refresh button,” Walker said from his cheese-aging room in downtown Little Rock. “It’s exciting. It’s a great opportunity, and it couldn’t come at a better time.”
Walker signed a lease to move into a building on Sixth and Main streets in August. The move means the former Web designer, who started out making cheese as a hobby in his kitchen, will finally have a space dedicated entirely to his craft.
For now, Walker makes cheese in the kitchen of Trinity Episcopal Cathedral, where several other burgeoning chefs, ice-cream makers and foodies also have started their businesses. He ages the cheese in the caverns of a former beer distributor on East Fourth Street.
The operation is both the simplest and most complicated thing he has ever done.
“It’s pretty easy in that you can start the morning with milk and in four to eight hours have cheese,” Walker said. “But there’s something really magical about that, too.”
He uses a tent with shelving built in. The floor is dank, partly because he spreads water on it to keep the storage room at the same temperature - 52 degrees - and moisture level as a cave, where traditionally cheeses were aged in Europe.
Business has been picking up. He sells his wares at restaurants, bakeries and farmers markets all over central Arkansas.
And in order to expand, the business needs $10,000 for a 500-gallon cheese vat and molds and other equipment.
Right now, Walker has two vats that hold 60 gallons and makes 60 pounds of cheese a day. Running in shifts, that means 250 pounds of cheese a week.
But that cheese still has to age.
Walker likes to let the product age for at least three months. That means his capital is tied up in rounds of compressed curds, getting tastier and more expensive by the day.
The new vat and the new space would give Walker the ability to make 2,500 pounds of cheese a week. That would do well for the cheese tastings and wine and beer offerings he plans.
“What’s amazing about it is it comes out to a little more than $400 a month in payments,” he said. “That’s without interest. No bank would give that kind of loan to a business of my size - not for that price. I may have ended up paying $800 a month and half of it to interest.”
Kindra Brock understands his excitement. The shop owner opened the doors of her boys-only clothing store, Xclusive All Things Boy, in west Little Rock in January.
She received a loan through Kiva and its partnership with Accion, the largest microlending institution in the region.
“I had heard three nos in a row from lending institutions, and then I talked with Accion and that turned into a yes,” Brock said. “I don’t think I would have been able to open the doors if they hadn’t said yes. You get all the way through and to being ready to open, and there are these costs you never think about it. It was the biggest help you could imagine.”
Brock’s store focuses on the slogan, “Because he’s special, too.” She has a 10-year-old son who needs big-and-tall clothing and a toddler who was premature and arrived home at 3 pounds and needed smaller clothing than she could find.
“You see all these stores focus on little girls, but I wanted something that made all little boys feel special,” she said. “Eventually, I want to start a nonprofit that gets middle-school boys to think about their future and awards them scholarships at an early age so they will be thinking about college and will realize they’re important and valued.”
For right now though, Brock is applying for a second Kiva loan for $5,000 to help with inventory for the back-to-school season. She hopes to have her first loan paid off by then, too, which would be ahead of schedule.
“That help meant a lot, and there’s no way I want to let those people who believed in what I was doing down,” she said.
In Little Rock, the Kiva program comes as burgeoning natural and homemade food trends are exploding in food trucks and the South of Main Street area, as well as spreading downtown into Main Street revitalization plans.
About a half-dozen businesses that started in that food scene are requesting Kiva money to expand.
The city also has plans to include space to lease to businesses at the new 12th Street Little Rock Police substation, which will break ground later this month. With help from the crowd source funding, the neighborhood may be able to meet its goals of getting community-based small businesses into the building.
Several of the loan seekers are ex-felons looking to start businesses or expand on trade skills they’ve been using at other people’s businesses.
The program fits with a recent city intiative to help parolees return to the community. A large portion of that program focuses on job-skills training and employment opportunities.
There also may be a place for the program to help turn student research into businesses, pairing with efforts for the proposed Little Rock Technology Park.
The park is still in its planning phase, but the park’s authority board has heard from successful start up businesses and the organizers of other parks - all of whom mention the importance of private community investment.
One professor at the University of Arkansas at Little Rock is turning the crowd sourcing platform into a way to inspire entrepreneurial students into starting businesses once they leave the university.
Stuart McLendon signed up to be a sponsor on the site and has already backed one borrower, a student who won an entrepreneurial competition in one of his classes.
“There’s that old saying about giving a man a fish versus teaching him to fish,” Janie Greer, president and chief executive officer of Accion Texas, said at the announcement Friday. “Well, we believe in giving them a loan so they can buy the pond in which they fish and leave assets and a legacy for future generations to build upon.”
Front Section, Pages 1 on 03/16/2013