Most 1K Churches choose the simplest, most direct pathway for their loan to a small business. We call it the Angel Investor pathway. It is a simple agreement between the church and the business owner to invest and repay a small loan according to certain terms. Other congregations have opened the lending relationship to include the wider public through an online crowdfunding platform, supported by our good partner Kiva. We call this the Public Witness pathway, because the church serves as the official Kiva Trustee and publicly endorses a small business owner who deserves wider support. Criterion provides detailed implementation guides for each of these models.
A new implementation guide for our third loan pathway is now complete and posted on the Criterion website here – //criterioninstitute.org/our-work/1kguides. This pathway is called the Peer Lending Host. Here the congregation relates not just to one, but to a small group of business owners in their community. The congregation puts its trust in the group to decide which of their number should receive the congregation’s investment. It takes the congregation out of the role of being the power broker. It honors the business owners’ own grasp of what a business needs, what works, and what won’t. It is an act of trust that empowers the small business owners themselves.
Such groups probably already exist in your neighborhood or town. Here in the Sonoma, California, where I live, the La Luz Center is the primary resource for disadvantaged families seeking opportunities to improve their circumstances and become economically self-sufficient. Their services include an association for the owners of small businesses along the major highway on the edge of town. I was warmly welcomed when I attended their monthly breakfast meeting to tell them about 1K Churches. They were enthusiastic in their response to the idea of partnering with local churches providing small business loans. They were also pleasantly surprised to learn that churches would seek to get involved with them in such a way.
This Peer Lending approach was inspired by Ross Baird, a venture capitalist and a good friend of 1K Churches and Criterion Institute. Ross is committed to creating social good through business. He is the CEO of Village Capital, whose mission is to find, train, and invest in entrepreneurs solving real-world problems. They build communities around entrepreneurs and their ventures to improve opportunities for growth and success. Village Capital brings these innovative, socially motivated entrepreneurs together in groups of six or eight for mutual support and training in building their companies. Village Capital also makes a significant financial investment in one or more of the companies within the group. They depend on the members of the group to make the decision about which of the peer businesses has the greatest potential to put that capital to work. The business owners evaluate and decide among themselves whose idea and whose capacity for bringing it to market is most worthy of investment. Learn more about Village Capital at www.vilcap.com.
Based on his extensive experience with this business development model, Ross Baird graciously worked with Criterion in conceptualizing, reviewing, and improving successive drafts of the new implementation guide for the 1K Churches Peer Lending Host Loan Pathway. Our thanks go to Ross for his partnership in this venture. It is now yours to explore.
We hearty encourage churches who are intrigued by 1K Churches to try this new way of supporting and relating to small businesses in your community.