Victoria's Community Micro Lending Society
By Leslie Campbell, June 2012
This organization can take a small amount of your money and turn it into a stronger local economy.
Small business has always taken guts (if I do say so myself). But in recent decades, with the rise of the global economy and consumers turning to huge corporations and chains for everything from books to food and clothing, it’s even trickier for entrepreneurs to make a living—or to simply get into the game. Coming up with the cash for rent, equipment, marketing, and wages before revenues start flowing, derails many a potential business in its infancy.
Certainly not everyone has family that can afford to help. And banks, while they may grovel for other corporate business, seem to have developed ironclad formulas that rule out loans of any size for any new business. Struggling single parents or those with student loans or, heaven forbid, a prison record, know enough to not even ask their banks for help.
It’s a shame we make it so difficult. Without small independent businesses, a community loses its diversity, its vibrancy, and resiliency. Choices for the rest of us diminish, both in products and services and in employment opportunities. We become unhealthily dependent on the whims of large, unrooted-in-this-place corporations—whose profits, earned from us, flow to distant head offices, suppliers and shareholders. The money earned by small business, on the other hand, keeps working locally.
So Victorians are fortunate that a few years back a group of people, led by now-City Councillor Lisa Helps, got thinking about micro credit. It’s been used successfully for decades in the developing world, but is relatively new to North America. Victoria’s version, the non-profit Community Micro Lending Society (CML), began two years ago and has thus far made 12 loans. As a result, Victoria now has 12 young businesses employing people in everything from catering and property maintenance to welding, digital media, and organic gardening.
The loans to all 12 total only $45,000—the maximum loan is $5000—but the recipients, as you’ll see, know how to stretch every dollar. Their modest loans have made a world of difference for them—and this community.
But they are loans, and while they beat using credit cards to finance business costs, they do have to be paid back in a timely manner. CML’s Director of Entrepreneur Support Vu Ndlovu explains, “There is a fixed interest rate of 10 percent on all loans with payments due on the first of every month. Each loan is given final approval by our Loan Committee (three members of our board and a community member) and it is the Loan Committee that decides the length of loan. Loans can be anywhere from one year to five years. The entrepreneurs can pay the loan back in full at any point without penalty.”
The money comes from individuals right here in Victoria. Lenders can loan as little as $500 to an entrepreneur of their choice and earn a two percent return on their investment.
While CML is still in its own infancy, Executive Director Helps believes, “This local peer-to-peer lending is the way of the future, particularly as the old economy crumbles and we create a new economy together.”
CHELSEY TAPOROWSKI was helped by a micro loan from CML to follow her dream of becoming an independent mortgage broker. She had worked in the industry as an assistant for years, and was also working nights as a waitress, trying to save enough to take the leap to brokering which pays only on a commission basis. But with two daughters to support, she was still nervous, short of funds, and she admits, “The long hours began wearing me thin…I decided that if I was going to give this brokerage thing a fair shot, I needed to quit both my assisting job as well as my waitressing job and focus full-time on building and growing my business. This decision also meant I needed to fund all of the expenses that come with a business start-up.”
Her micro loan allowed her to quit her night job and “sink my teeth into building what I set out to build. The scariest part about taking on a challenge like this is ‘What if I fail?’ At some point one has to just jump. By putting some support systems in place—personally, professionally and financially—I was able to make the transition with a sense of security. CML was part of my support system—in many more ways than simply financial.” (www.chelseytaporowski.ca)
Gavin Chamberlain’s company, Heritage Landscape & Masonry, specializes in drystone walls and patios, using local products wherever possible. But they also offer basic lawn and tree/shrub maintenance, garden installation and “hardscaping”—driveways, fencing, fireplaces, etc. (www.heritagelandscapes.ca)
Proving both how crucial and far CML’s micro loans can go, Gavin explains how he spent his $5000: “In the short term it allowed me to buy a chainsaw and safety equipment which I needed to secure a large job which helped me through a slow period. It allowed me to carry out essential repairs to the vehicle I had recently bought and without which I don’t have a business.” As if that wasn’t enough, the loan also paid for a professional web designer to help market his business, and finally for a cement mixer and stonesaw, tools he had previously been renting.
Natalie Justin, who runs Stir It Up Authentic Caribbean Soul Food at 1284 Gladstone in Fernwood, was in business for five years before contacting CML. Her loan enabled her to add some inside seating and purchase a vehicle for delivery and catering of her all-made-from-scratch menu (www.stiritupfoods.com).
Entrepreneur Bobby Holt recently became the organization’s first business to completely pay off his loan for his Complete Maintenance Services (www.cmsvictoria.ca). He had started the business during the first snowfall of 2011 with a snow shovel, some flyers, and a lot of door-knocking. Two months later, he had a maintenance contract for a property management company with over 40 buildings, but needed more equipment. His $5000 micro-loan was used to buy a truck and pressure washer. Says Bobby, “We truly do offer all aspects of service a property owner or renter faces, from installing seagull repellant on rooftops, to graffiti removal, to fixing that leaky faucet, or building that custom compost bin so the wheelbarrow will fit perfectly.” He does garden and lawn care, as well, using all eco-friendly products.
All of those interviewed commented on the mentoring that CML offers as being an incredibly valuable part of the program—as important as the money. Says Bobby Holt, “It’s fantastic really! It’s like you’re walking in a dark field and [the mentors] are there suggesting which route to take to avoid tripping, because they have walked the field themselves, many times before.”
A similar program aimed at youth age 16-30, and offering even more guidance, has just been launched by the CML. On Saturday, June 23 from 1-4pm there will be an art sale/fundraiser for it at the Atrium Building.
LOOKING BACK to CML’s own start-up, Helps says, “Two years ago we asked neighbours to invest their money in other neighbours, and some people looked at me as if I had two heads.” But now she’s seen a shift: “the word is out…and people are excited.” She feels the organization has found its feet and is ready to grow.
She assures potential lenders (that means you) that “the loan committee does a heck of a lot of due diligence to ensure the entrepreneurs we lend to are loan-ready…The good news is that all our entrepreneurs (except one who is a little behind) are repaying their loans on time.”
She urges interested people to read about the latest businesses seeking loans on the CML website (www.communitymicrolending.ca). The identity of lenders is kept anonymous, though they are welcome to introduce themselves if they wish. Mentors and other volunteers are also needed. And everyone is encouraged to patronize these young local businesses.
The latest entrepreneur seeking funds on CML’s website is Matteus Clement of Mazo Media. See the great video he produced about another micro loan recipient on YouTube (type in “mazo media rachael”). So far, half of the loan of $4970 has been raised.
Part-time Executive Director Helps is excited about CML’s new membership program. Community Supported Economy Memberships allow established local businesses who donate $100/month (charitable receipt available) to be promoted on the new “Buy Local Hire Local” page of the website. They “are the point of first referral for our growing community of entrepreneurs and mentors, and will be profiled in our monthly newsletters,” says Helps. The first such members include Driftwood Brewery, Kenmar Flower Farms, Elizabeth June Financial Services, Vancity Scott Street Branch, and The Cooperators.
It was reading about an earlier local initiative, the 1930s Victoria Citizens’ Emergency Relief Fund, that propelled Helps toward establishing a micro lending society. She believes our ability to flourish locally is limitless. We just need to help one another.
Focus editor and founder Leslie Campbell was able to rely on her super-supportive parents for $7000 in start-up funds for this magazine back in 1988. She invites Focus readers to consider investing in community journalism by way of a Focus subscription.