Beyond the Bank: How local businesses are turning to their neighbors for funding

[marmar]

from YES! Magazine:



Home-Grown Businesses: The Role of Grassroots Financing
Local investors for local businesses—how businesses are turning to their neighbors for funding.

by Stacy Mitchell
posted Aug 26, 2010


In the summer of 2008, business partners Jessica Stockton Bagnulo and Rebecca Fitting were making plans to open a bookstore in Brooklyn. Their chosen neighborhood, Fort Greene, was over the moon at the prospect. For years, residents had been clamoring for a bookstore, repeatedly citing it as their top need in surveys conducted by the neighborhood association.

Although Fitting and Bagnulo still had a long way to go—they hadn't found a space yet or secured financing for the venture—the Fort Greene Association decided to throw a party to welcome them to the neighborhood. More than 300 people came.

That was in mid-September. A week later, the financial crisis hit. Even before the meltdown, Bagnulo and Fitting knew that securing a bank loan for a start-up bookstore would be tough. Now it looked downright impossible.

The warm welcome from the neighborhood gave them an idea, though. Bagnulo and Fitting reached out to people in the community and, over the next few months, raised $70,000 in more than two dozen small loans from their future customers. Combined with their own savings and a loan from the World Trade Center Small Business Recovery Fund, this gave them the $346,000 in capital they needed. Last October, they opened the Greenlight Bookstore on Fulton Street. The store has been a huge hit, with sales exceeding their projections. ..........(more)

The complete piece is at: http://www.yesmagazine.org/new-economy/bypass-the-bank-local-investors-for-local-businesses