Economics & Economy
Mon May 19, 2014
Roanoke Eatery Enjoys the Sweet Taste of Success
You may have heard of Kickstarter, Indiegogo, or other programs where people donate money to help fund a specific project, such as a film. Roanoke is the first Virginia city to implement a new type of grass-roots crowd sourcing for small businesses.
Viva la Cupcake is a shop in Roanoke’s eclectic Grandin Village Community. On a street corner across from an elementary school, it’s the perfect spot for parents and their kids to stop for a sweet treat. Pennie Ahuero and her husband opened the shop five years ago and now they’re ready to grow.
“We want to buy a Viva La Cupcake trailer so we could go to special events and birthday parties and just be able to carry our cupcakes out in a nice little cool trailer that they won’t melt in the summertime events.”
But a refrigerated trailer costs up to 10 thousand dollars and the Ahueros didn’t have the dough.
“We did go through one bank and it just wasn’t the right fit for us and them and so we were just kind of pondering which route to go next.”
Enter Brent Cochran with the microlending group Community Sourced Capital. He’s got a plan for sustainable lending.
“We allow local businesses, small businesses like Viva La Cupcake here to source loans directly from their community. So we crowd source or crowd fund loans for local businesses.”
Cochran says most banks won’t grant loans of less than 50 thousand dollars, forcing many business owners to max out their credit cards or beg for help from friends and family. Community Sourced Capital allows established businesses to borrow from people who want to support local merchants and companies.
Those who donate online are called “squareholders”.
“It has some resonance with the community square. It has some resonance with share and shareholder but it it’s not a share and you’re not a shareholder.”
So there are no dividends and no interest paid on loans-only the satisfaction of helping to build a thriving community.
Community Sourced Capital got its start in Seattle a year ago. Since then, it’s garnered more than 300 thousand dollars in interest-free loans for 20 businesses in the Pacific Northwest. One of those was Starvation Alley Farms in Washington State which needed 12 thousand dollars for an industrial grade juicer. Spokesman Jared Oakes says they raised the money in just two weeks.
“We have 112 people that loaned us money and have a pretty big interest in our company and where we’re at and it made them really, really care about what was happening going forward with our company.”
So far, Viva la Cupcake has surpassed its initial goal of 5 thousand dollars and the owners believe they’ve found the recipe for success.