Microfinance in Central Ohio
The idea of microfinance was sparked in 1976, when the Grameen Bank in Bangladesh was founded to make very small loans to poor women to start or expand a business.
Since then, the idea been embraced around the world, including in central Ohio, where the Economic and Community Development Institute is operating in 18 counties, and on-line where ProFounder has established a crowdfunding platform for entrepreneurs.
ECDI founder and CEO Inna Kinney said that they work from 15 funding streams that include some that are partial to women-owned start-ups or expansions. Traditionally, she said, women have a harder time securing loans.
“You see more women working in the corporate world than you do in the small business world,â€ Kinney said.
ECDI loans range anywhere from $500 to $100,000, and strongly favor local companies. And the non-profit organization now accepts investments of a minimum $1000, with the ultimate goal of $1 million. The idea is to inspire local people to invest in local businesses, Kinney said. Three-year notes have a 2 percent return, and five-year notes carry a 3 percent return.
One of those investors, Timothy Wolf Starr, says it made sense for his new company to invest in other location start-ups, and that $1,000 is an affordable minimum. His Small Business Beanstalk links local businesses with local consumers via a discount card. Some 300 businesses now are members.
He set three criteria for businesses to participate. â€œThe company has to be local and independent, provide a clear value and they have to be awesome,â€ Starr said. â€œItâ€™s our very fun way to say they represent the best brands in Columbus.â€
It wasnâ€™t easy, at first, Starr said. “It was a giant game of chicken and egg, businesses didn’t want to sign up for the card when nobody had the card,â€ Starr said. â€œAnd people didn’t want to sign up for the card, when there were no businesses.”
The Internet is another option. West-coast based ProFounder works on-line to link start-up businesses with funding from friends and family in a formal, legal framework. Profounder, which went on-line in December, already has helped generate some $500,000 for a total of 18 businesses, everything from a brewery in North Dakota to an ice cream shop in Hawaii.