CIC tries to grow Charlottesville's small businesses

According to 2008 census figures, 97 percent of the Thomas Jefferson Planing District’s 27,528 businesses qualify as micro or small enterprises. Microbusinesses—those with five or fewer employees—make up more than 75 percent of that number. Through discussions with area banks as well as interviews with more than a dozen local small business owners, the Community Investment Corporation (CIC)—a Charlottesville-based microfinancing group currently under development—says those small businesses can have a hard time getting loans through traditional means.

“We want to become the nexus for everything small business,” said Toan Nguyen, co-founder of C’ville Coffee and a member of the CIC Leadership Team.

While the effort is in its early stages, both Nguyen and Bennett met with C-VILLE to discuss CIC’s organization and hopes. The pair describe CIC as an opportunity for small business owners to find critical, early-stage loans outside of banking systems that might not extend funding. However, said Bennett, funding is “a small part of the puzzle.” CIC plans to offer funding opportunities alongside educational opportunities and a mentoring program for its members.The group’s list of volunteers numbers more than 50. The leadership team includes directors and founders from the Piedmont Housing Alliance (PHA), Center for Nonprofit Excellent, Virginia Workforce Enterprise, entrepreneur instructors at UVA’s Batten Institute and Charlottesville Albemarle Technical Education Center, former Congressman Tom Perriello’s district director, and Gordon Bennett, CEO of Gordonsville-based software company Web Data Corporation. Bennett and PHA’s Stuart Armstrong have contributed funding to support one paid staff member, Hebah Fisher, who studied microfinance at UVA.

Currently, CIC can nearly cover its first year of administrative and web development costs, which it pegs at an estimated $80,000. It received $12,000 in seed money from four pledges, and Piedmont Housing Alliance plans to contribute roughly $60,000. After finalizing its business plan and receiving its nonprofit status, CIC hopes to grow its loan funds from $84,000 to $180,000, and finance small businesses in increments up to $35,000.

Those loans carry commitments to CIC’s educational components: a 12-week education program for new businesses, and a mentor-matching program. According to an executive summary, borrowers would “undergo relevant training and business-planning, continue with their mentors, and submit monthly financial statements during the term of their loan.” CIC hopes to be self-sustaining after three years, and plans to earn revenue through paid memberships, educational events, and fees for its clients. The organization can also accept pledges now, and donations once it receives its nonprofit status.

According to business anthropologist Daisy Rojas, Charlottesville has a significant number of aspiring small business owners. The challenge is knowing how to find and patronize them. Rojas, a facilitator for the Dialogue on Race’s economic work group, said many small business owners struggle to find relatively small loans. (Charlene Green, program coordinator for the city’s Dialogue on Race, held many of her economic work group meetings at C’ville Coffee, and Nguyen attended.) Those loans—from roughly $5,000 to $25,000, according to a survey conducted by the economic work group—might require the same administrative oversight as larger loans, but might not cover the expenses as easily as larger loans do.

Rojas previously assisted Gregory Fairchild, a professor at UVA’s Darden School of Business who teaches a course called “Entrepreneurial Thinking,” for a study of unbanked Latino communities. Among other things, Fairchild’s study documented declines in robberies following the launch of Latino credit unions, and suggested that Virginia currently loses $900 million in unbanked money annually from its Latino communities.

She also worked with Piedmont Housing Alliance (PHA), a Community Development Finance Institution, which is certified to apply for federal funds for the purpose of making loans to small business owners and others. Rojas helped conduct a feasibility study for a Community Development Credit Union [CDCU]—different from a financial institution in that, if designated “low income,” it can often accept non-member deposits.

“A CDCU is really devoted to serving the underserved,” said Rojas. “We’d already identified through the Darden report that there is a large Latino population underserved. But they’re not the only one.” A Community Development Credit Union, then, could keep more money in the local community and, conceivably, work in tandem with programs like the Community Investment Corporation to create a more vibrant, eclectic small business scene.

“If that money isn’t going into local banks, then we can’t make loans among the local population,” said Rojas. But—and it’s a big hypothetical—that could change.

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