Sam Adams brewer and Boston Beer Company founder Jim Koch, right, speed coaches a small businessperson at an event in Los Angeles.
Los Angeles is becoming the U.S. center of alternative small-business lending. Over the summer, California-based microlender Kiva unveiled a new program to loan modest amounts of money to entrepreneurs in the region. Now one of America's most famous brewers has gotten in on the act.
"This all came from my experience starting Sam Adams in my kitchen 28 years ago," said Jim Koch, a cofounder, chairman, and public face of the Boston Beer Company, which kicked off the American craft-beer — or microbrewing — revolution three decades ago.
Koch was talking about Samuel Adams Brewing the American Dream, his company's microlending initiative, which debuted in Los Angeles this month with an event at the Grace E. Simons Lodge near Dodger Stadium. The program has two objectives: provide financing for food, beverage, and hospitality businesses that are too small to pursue truly big bucks; and furnish those entrepreneurs with high-caliber advice, in the form of mentoring and coaching.
Los Angeles Mayor Antonio Villaraigosa made a stop in South L.A. this morning to celebrate a small business — Café 22, a healthy food eatery across the street from L.A. County USC Medical Center — and welcome a new financing opportunity aimed specifically at small business to town: Kiva.
Kiva is a non-profit service that connects donors with needy entrepreneurs around the globe. They don't make the loans; they facilitate the relationships. As its president (and former PayPal executive) Premal Shah said, they're like the Match.com of microfinance, enabling small-scale philanthropists to get money into the hands of businesspeople who have a tough time getting loans from big banks.
To do this, Kiva works with "field partners" — lending organizations around the world. Kiva takes businesses, individuals, and often in the developing world, women's labor collectives, and posts their pictures and business needs online, along with a loan amount. People can then use Kiva's website to contribute money, which the lendees then pay back over time. In the developing world, these loans are typically very small, and they're funding by people making $25 donations which they have the option of "reinvesting" after payback — or re-loaning to a new business.
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Welcome to your friendly neighborhood investment bank. Do you want them to leave room for...return on investment?
Here's an idea that's going to get people talking — and funding small businesses. The New York Times' Joe Nocera writes his column today about Starbucks' plan to partner with microfinance organization Opportunity Finance Network to solve a major American problem: a lack of small-scale lending. The project is called Create Jobs for USA. It's a great idea, but it has at least one significant problem: return on investment for the Starbucks customers who would be putting up their money.
Starting November 1, while waiting for you nonfat vente caramel latte, you can donate, say...$5 to the cause. You'll receive a red, white, and blue "indivisible" bracelet (the bracelet is an inevitable piece of viral marketing these days). Starbucks will seed the fund with a $5 million donation. As Nocera points out, this will enable Create Jobs for USA and OFN to borrow against this fund, utilizing a 7-to-1 leverage ration. Presto! Your $5 becomes $35.