Banks tend to scoff at loaning money to startup businesses, the unproven brainchildren of entrepreneurs who don’t have the dollars to back their ideas.
Local resident Amy Chalker didn’t even try approaching a bank last year, knowing that she lacked the necessary capital to launch her own small gourmet food business in downtown Santa Barbara.
The 30-year-old gained the courage to go out on her own with a $10,000 loan, which built inventory and helped open Isabella Gourmet Foods at 5 E. Figueroa St. last May.
In December, Chalker received another $15,000 loan to expand, and said she has every intention of paying back her community-based lender.
“They literally walk you through every step of the process,” Chalker said.
Chalker is one of nearly 2,500 local female (and male) entrepreneurs who have obtained financial support through WEV’s microfinance lending — the only such program around.
The nonprofit WEV has loaned more than $3.5 million to “pre-bankable” businesses since 1995, with the hope of creating future bank customers when they succeed, according to WEV founder and CEO Marsha Bailey.
She said the program was founded in 1991 and initially modeled after Grameen Bank, the Bangladesh financial institution established by Nobel Peace Price winner Muhammad Yunus. He has been called the father of microfinance lending and will be speaking Feb. 28 at the ninth annual Westmont College President’s Breakfast at Fess Parker's DoubleTree Resort.
Whereas Yunus loaned mere hundreds of dollars, WEV found that most Santa Barbara-area ventures needed much more to get off the ground, as well as self-employment training.
“We’re getting an enormous amount of calls from women who heard about loans and called wanting training,” Bailey said. “It’s not just the financial capital that small business owners need. They need an investment in them. That’s where the training and education come in. Women and men alike — and especially women — really appreciate the support systems that get built in the classroom.”
WEV fills a gap in the local lending market through its holistic approach, which targets the low- to middle-income demographic.
The program could especially help empower women, who can be more cautious and thoughtful when starting a business, according to Karen Mora, president of the Santa Barbara Chapter of the National Association of Women Business Owners.
Online crowd-funding might also be considered a form of micro-lending, one that has been around for years but grew in popularity, said Patty DeDominic, a local entrepreneur and owner of DeDominic & Associates.
Along with small loans, WEV has given Chalker a steady support system and self-confidence that allows her to imagine scoring a future bank loan of her own.
“They just want the business to succeed,” she said.