When Sarah McGowan Dear made a career shift from doing social work to working for herself, she learned some valuable lessons. Among them were that she would never qualify for a small business loan, and that developing relationships within her community was the best way to build her business. So, she kept building community.
“I continued to connect people” she explains, “[to] build sharing networks among civic groups, and work to bring people together to leverage social capital rather than give in to the antiquated paradigm of market competition and distrustful secrecy.”
One of the ways she connected people was through the Arroyo Seco Network of Time Banks (ASNTB) in Los Angeles. Through this work she saw how many small businesses were emerging as a result of skillshares and exchanges within the network. As project developer, McGowan Dear researched ways of “matching untapped resources with unmet community needs.” Part of this research involved a trip to the New Economy Institute in Massachusetts. It was on this trip, she says, that “the collective light bulb went off” for herself and ASNTB co-founders Janine Christiano and Autumn Rooney, and the idea for a loan fund for the time bank was born.
The ASECO Community Revolving Loan Fund (CRLF) is the first ever small business micro-loan program funded by, managed, and benefiting a time bank. The loan fund provides low-interest micro-loans to eligible ASNTB members with a small business or worker-owned cooperative.
Repair Cafe at the Arroyo Food Co-op. Photo by Caroline Ducout
The CRLF was funded initially through support from the Metabolic Studio and a crowdfunding campaign. It was launched in January with $10,000. The first two recipients are Jolie Assina of CoconutCow and Priobiotics House, who received $1,500 for Farmers’ Market related expenses, and Somerset Waters of Pacific Electric Worker-Owned Cooperative LLC (Solar Installations), who received $2,500 for materials and marketing.
Eligibility for loans hinges on active involvement in the time bank community and a commitment to the well-being of the community that the business serves. Ventures that support the economically distressed, women, the environment, community sustainability, social enterprises, ASNTB, coops and other sharing economy initiatives will be given priority.
The people-first ethos that time banks are built on is key to the CRLF’s promising model. The loan fund absorbs all the risk for the borrower through a partnership with the Permaculture Credit Union, and the community is there to help if a borrower has trouble repaying a loan. While the loans are made in dollars, time bank credits can be used to pay associated processing fees. Interest on the loans is 6%.
“That’s an incredible opportunity for a first-time borrower,” explains McGowan Dear, “because not only are they able to borrow, but they also establish or improve credit rating.”
Loans of $500-$5,000 are considered by a peer review panel. These loans must be paid back in 36 months through a payment schedule that works for the borrower. Borrowers may also participate in the Local Economy Incubator (LEI) which matches time bank entrepreneurs with time bank mentors who provide business development expertise in creating a business plan, marketing, governance, strategy, legal, finance, branding and more.
According to McGowan Dear, this model has the potential to be transformative for borrowers and communities.
“It might be hard at first to see how a small business micro-loan fund is revolutionary,” she says, “but in a society that has come to turn a blind eye to the many ways we all pay for unconscious consumerism, supporting small, local and human-scale economic development is just the right salve for our ailing communities.”