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Microlending Summit Evokes Entrepreneurial Success Stories

by Kerry Smith

Bucking the statistic that three out of four startups fail are two determined St. Louis-based female entrepreneurs – one who has launched and rebranded a toy store, another who has opened a coffeehouse.

Shawnta’ Ray, co-founder of Happy Up in Clayton and Edwardsville, and Victoria Arguelles, co-founder of Kool Beanz Café in Granite City, shared their personal testimonies of their startups at the Metro East Small Business Development Center’s “Access to Capital” summit,” held Aug. 26 in Collinsville.

The half-day event, sponsored in part by St. Louis Small Business Monthly, attracted more than 100 regional bankers, nonprofit lenders and economic development professionals from all levels of government. Pairing hardworking entrepreneurs in need of startup capital – and gaining buy-in from bankers to help them or find them someone who can – was the crux of the event.   

Through a federal initiative known as the Community Development Financial Institutions fund, willing banks are able to provide credit and capital to startups in underserved markets, many whose credit profiles would normally deem them ineligible for a bank loan. In attendance at the summit were traditional and nontraditional lenders who agreed that small businesses are America’s backbone.

Ray and Arguelles told of a myriad of startup obstacles and how they overcame them thanks to the Metro East Small Business Development Center (SBDC) and another nonprofit organization known as Justine Petersen. Under the umbrella of the U.S. Small Business Administration, the SBDC steps in to aid entrepreneurs with startup expertise; Justine Petersen provides microlending, short-term loans that average between $7,500 and $10,000, to those who are considered “unbankable.”

Ray’s experience included buying an existing toy store, growing it and then being struck hard by the 2008 economic downturn and the growing increase in online toy buying. When the bank ultimately called Ray’s loan, she prepared to shut her doors. In March 2013, the store was in its final days when an amazing thing happened: Longtime customers refused to let it close. Within hours after the announcement, patrons spearheaded an online crowdfunding campaign that netted $82,450 in three days.  

“Hundreds and hundreds of families said, ‘We’re not going to let this business close,’” says Ray, who had given birth to her second child months earlier. “Patrick McKeehan, director of the Metro East SBDC, connected me with real-time legal, financial and marketing expertise. And Justine Petersen provided us with a microloan for inventory so we could gear up for our biggest season of the year (November/December). We’re definitely on the right path now thanks to these two organizations.”

Arguelles’ Kool Beanz Café occupies a newly renovated building in Granite City. At the “Access to Capital” event, she, too, recalled her hurdles and successes as a newbie business owner. Kool Beanz, the sole coffeehouse in downtown Granite, opened in mid-April.

“I got true support from both the SBDC and Justine Petersen,” says Arguelles, who has already expanded her menu as well as the business’s hours. “I’ve referred several other entrepreneurs to both organizations. As we continue to expand our identity and carve our niche in the midst of the city’s downtown revitalization, we’ve got an open invitation from the SBDC and JP to continue calling upon them for support.”

Galen Gondolfi, chief communications officer at Justine Petersen, says the microlender is all about financially empowering startups to pursue their dreams.

“We’re mission-driven,” Goldolfi says. “All of us need to be working within a modus operandi that says ‘yes’ – or, at a minimum, ‘maybe’ – to entrepreneurs and small-business owners. The ultimate goal is graduating our clients into a bank loan, but it begins with our willingness – and that of our partnering banks and organizations – to sit down, have a conversation, and encourage and empower startups.”

Terry Stark, vice president of PNC Bank’s business banking division and regional sales manager, said PNC’s first transaction with Justine Petersen occurred four years ago. The two entities have been working together regularly since then to support startups in need of financing that might not meet traditional banks’ moderate-risk lending profiles.

“PNC invests in Justine Petersen, and in turn Justine Petersen is able to assist small businesses,” Stark says. “Having an entity like Justine Petersen step into that void and say, ‘We can help’ is critical. As lenders, we have to figure out how to bring all of the boats up (with the tide), not just the healthy ones.”

Entrepreneurs and existing businesses in need of complimentary expertise may contact the SBDC and Justine Petersen for one-on-one, confidential assistance.

In Southwestern Illinois, contact the Metro East SBDC at 618-650-2929 or sbdcedw@gmail.com. Contact the Missouri SBDC at 314-539-6600.

To inquire about microloans for a startup in the bistate region, contact Justine Petersen at 314-533-2411 or visit www.justinepetersen.org.

Kerry L. Smith is a freelance business writer. She can be reached at (618)225-2253 or kerry@informationworks.org.
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