For most of us the prospect of getting a loan conjures up an awkward trip to a bank, or credit union, or other traditional lending source.
Next comes an intimidating meeting with someone across a desk, in a fishbowl of a cubicle, being given an inquisition about our personal and business finances.
We squirm and smile, pushing our shoebox of paperwork across the desk, in the hopes of winning the favor of the almighty loan officer and his or her underwriters.
And we try to be hopeful. Maybe if we can look and sound good enough, worthy enough, friendly enough? – they might say yes.
We fill out pages of numbers and dig through documentation while they run a credit history, check our police record, and glare at the dirt under our fingernails.
Interest rates, loan terms, and amortization schedules – we just hope we have the right answers.
No Hope Really
But these days the ridiculous truth is that unless someone already has enough money (as in collateral, savings, stocks, a private jet, etc.) in the first place it’s unlikely they will get approved for that mortgage, or car loan, or personal or business loan.
If you’re a small business owner, like a farmer or a local food entrepreneur (the new term is ‘agri-preneur’) just making ends meet, that capital you’re asking for may be crucial to cover a piece of equipment (probably ‘used’ to save money), or seeds, or much needed labor. These are costs that are vital to the productivity of your operation, and to your income – but which you quickly realize looks pretty paltry on paper.
But that walk-behind tiller, or cooler, or seeder, or greenhouse – would be so very helpful. You could get through another year and maybe even get ahead.
If you a just had a little extra cash right about now.
The chances of getting a conventional loan for, say $5000 at 3% interest for 4 years, that you are quite sure you could afford to pay?
That number is the easiest one to calculate. The chances are zero.
You might be able to use a credit card, but at 18% or 21% or 25%, that is a terrible option.
This is where Slow Money comes in.
Around the country, and especially in North Carolina, small farmers and local food business owners are finding folks in their communities that want to step in where conventional financiers will not, and make direct, peer-to-peer loans for these kinds of projects.
These are loans based on a personal friendship that arises between a committed and generous locavore and a passionate, hard-working farmer or ‘agri-preneur.’
Using a simple Promissory Note, together they work out the terms of the loan and the deed is done.
Simple and kind of old-fashioned, these Slow Money loans are essential to promoting and supporting our precious small and medium-scale sustainable farmers and to protecting and nurturing our planet’s valuable fertile topsoil.
Over the past three years nearly 40 farmers and ‘agri-preneurs’ have received Slow Money loans in North Carolina alone (and many others across the country) to purchase a skidsteer, a Hobart mixer, a cooler, and a precision seeder. They have gotten capital to cover wiring costs, labor costs, or seeds.
These are low-interest, short-term loans, and they tend to perform very well.
Who are the lenders?
Slow Money lenders are ordinary people who understand the value of local and sustainably grown food. They want to protect and nurture the fertile topsoil and clean water sources in our foodsheds – a concept similar to watershed.
When they hear about the Slow Money mission of putting money to work right in our communities rather that out in la la land (some call it Wall Street) they love the idea.
Their lending criteria have more to do with trust and friendship than numbers on a page. They know that the bottom line is not a big financial return on their investment but a bigger and better return to the well-being of their community and their planet. Personal recommendations carry more weight than faceless, voiceless credit scores.
It is a radical new idea (or a return to a sensible old idea.)
Do it yourself financing. Putting our money where our mouth is, and then eating better because of it!
We can do this. It’s rewarding, and it’s not hard.
Take a look at Financing Our Foodshed and join this exciting movement.
I’ll see you there.
Carol Peppe Hewitt presented a workshop at the Puyallup, Wash., FAIR.