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Home My WebLink AboutCOM 0719.000 1996-1998 . --re 4o~~Hawall'e Bya~ne' . . y,Q , , , SAS 1 g Island Sustainable Com_.iulut><es Association LO. Box 797, I{urtistown~_HI 96760 E - pb/fix: (808) 966-6977 (if line is busy, gage 899-0270) ~~t','„a" ewail: hdtC~inre~p,aanet Buy Local Products - ~ i C~,~~,.~ D~1ISSION: 1'o assist people in the Big Island's communities in meeting their agriculliira~~, educational, personal, cultural, economic and community needs to develop a u'uly sustainable way of life. PROGRAM IIIS'l'ORY: ' • Gstublished iu 1976 as an educational Young Fanner (YP) organization, affiliated with slate and na- tional YP groups. Focus was leadership development and educational outreach to the agriculture amununity. • hi 1977 implemented the Milo Christmas Pair, which has beome the Big Island's annual premier fine crafts aed arts lair. • Provided on-going community service projects and community gardening grants. • Initialed the firs) Agricultural Leadership Scholarship for University students in 1989. • Rcorgauizal in 1995 after couunuuity planning sessions. New focus on "sustainable communities." • Lrilialcd the idea of umicro-cnlcrprise loan program in 1995. ACCOI~IPLISI1Ml~N'I'S: • Provided 23 years of conunuuity education and support service. • Developed annual Agricultural Leadership Scholarship grants to college students, increased to $1,000. • Presented annual awards Io Future Fanners of America students. • Conducted annual Waiakar Soil Conservation awards. t'icalcd local cuicrprisc opporhmitics, such as the Milo Christmas Pair and Mothers Garth Pair. :'ul~li:;hed educational aides- Ilalcnii Agriculu~nztl Resource Guide and Ag Update ~ ~~nudal resources and coordinated commm~ily plantings (IICC and CES) and public park maintenance I is ichardsou's). i'n~~~ided community garden grants (llilo Interim florae, ICeaau Ltlennediate School, Pahua Intermedi- ate and high School). Received nomination for the Governor's Volunteer Award March'96. I^'U'1'UKL ll_LVLLOPNILN'I': • Economic Development Initiative -develop and implement a comprehensive business development program which uf[ers access to credit, business training and networking to Big Island entrepreneurs (c.g., micro-cnlcrprise loan program). • 1?ducaliunal Support Prograur -develop and coordinate educational ouUeach program in support of wstainahle living end economic improvement. • Conuuunily Resource Park - develop and implement Resource Center (sustainable agriculture infor- mation dissemination and training center), recycling industry incubator, community gardens and Clea nru kcl . Comau Jtia. Rig >X~ R~s /]ssisting Big Island canzn:unities to dez~elojt a nznre sustztinable way a It e 4 ff SED G-,,- 1l~L I>~_ FEB y ~~~4~,.._ ' ' o~gawaii~s suai~e~ 5°°Q s Big ~ '.and Sustainable Commu .ties Association P.O. Box 797, Kurtistown, HI 96760 Ph/fax: (808) 9GG-6977, Voice pager: (808) 899-0270 p Email: hdtC~interpac.net Buy Local Products Working Capital Hawaii Revitalizing the Neighborhood Economy Why Microenter ro ise,' Today there are over 400 initiatives in the United States aimed at nurturing and developing the entrepreneurial potential of America's neighborhoods as a path to economic development, job creation, and poverty alleviation. While this country has been built on the premise that it is possible to achieve wealth and power simply by "pulling oneself up by the bootstraps," this opportunity has not been available to all Americans. Gender, racial, and economic discrimination has effectively created barriers to credit, business education, and commercial networks which are critical to healthy business development. hr developing countries microenterprise development started over 25 years ago with initiatives such as the Grameen Bank in Bangladesh which pioneered the first peer lending model based on the principle that given access to credit the poor would be able to use their own inner resourcefulness to invest it and generate a steady flow of income. Inspired by the success of Grameen, other group based strategies blossomed in Latin America, Africa, and Asia. The village banking model in Latin America borrowed the group concept and incorporated a savings component and group control over decision making. Today millions of poor peasants in these countries have been able to significantly increase their standard of living as a result of these efforts which have largely been supported by the U.S. Agency for International Development, the World Bank, and now the United Nations Development Program. The American microenterprise movement developed initially as an effort to open the access to the needed resources to cultivate self employment. Microenterprise programs typically include a combination of training, credit, networking and support. After 10 years of experimentation in strategy and methodology, microenterprise development carries the hope that it will be a source of economic revitalization in our hardest hit communities. As efforts have begun to bring about results the U.S. government has taken an interest in developing the field with the creation of the Community Development Financial Institution Fund housed at the Treasury Department as well as special programs at HUD, HHS, SBA and Office of Refuge Resettlement to name a few. Many stale and local governments have followed suit by actively implementing policies and funding streams which support microenterprise development. Approaches to Microenterprise Development Depending on the mission of the sponsoring organization, programs have developed varied strategies to foster I Business skills and growUi. Some are "training led" and others are "credit led." The training led programs usually focus on an in-depth educational process with the goal of producing a business plan which can lead to business development. In addition to the training, most of these programs also offer access to credit through loan guarantee or direct lending programs. These programs play an important role in offering counseling and business education for new businesses. On the Big Island there are a few programs which offer these services including the Small Business Development Center, ACE-SCORE, and the Hawaii Community College, in addition a specialized workshops which are sponsored by local business and community organizations. The credit led programs arc often geared toward the more sophisticated customers who may not qualify for traditional commercial credit, but who do meet many of the conventional underwriting criteria. Micro loan funds feature loans which can range firom $5,000 to $50,000 and borrowers are expected to demonstrate credit history, ~Il;rteral, and hopefully enough experience to insure that the business can succeed. To compensate for relaxed underwriting, these programs also often require some sort of technical assistance. Because of the underwriting criteria, many of the smaller home based micro businesses don't qualify for these programs. Therefore most of the self-employed at the grass roots continue to be underserved. On the Big Island the Office of Hawaiian Affairs, Hawaii Department of Agriculture, and Hawaii Department oP Business, Economic Development and Tourism offer micro loan programs. Assisting Big Island communities to develop a more sustainable way of life Working Capital: A Strategy that Works Working Capital, recent winner of the first Presidential Award for Excellence in Microenterprise Development, is a national microenterprise program which features a peer lending methodology. This strategy has been able to achieve an effective blend of credit, training, and networking. Working Capital was founded by Jeffrey Ashe, a guru in international development with 20 years of experience designing and implementing global microenterprise models. This program is based on best practices which incorporates Grameen's small graduated Loans made through a peer group and the self-governance and group autonomy characteristic of village banking. Working Capital is currently operating in 7 states and has served over 3,000 micro businesses in the past 6 years. The target market is the entrepreneurial poor. These are very small existing businesses which have been operating through the sheer will and ingenuity oP the owner, with little infusion of technical assistance or capital resources. It also includes start ups by entrepreneurs who know what they want to sell, who they want to sell it to, and have some basic experience with the product. This program is designed to build on existing entrepreneurial knowledge and capacity in the community. Accountability and the Group Process In Working Capital, participants form support groups with 6 - ] 0 members and they work together to access the program's resources. These self-governed "Business Loan Groups" act as a loan committee for members' loans and as a training group designed to meet the specific needs of the businesses in the group. In addition, group members also provide each other with valuable support and feed back as each business owner strives to grow his/her business. Working Capital businesses are able to access credit starting at $500 and building in subsequent loans to $1,000, $ I ,500, $3,000, and $5,000. As borrowers repay each loan in short terms, they may apply to their group for the next The only rule is that in order to move up the ladder, all group members must be current on their payments. 'This provides members with an incentive to screen other members carefully beforejoining with the group and to carefully scrutinize loan applications before approval. As business owners go through the program, they have a hands on opportunity to test their product, their ability as a business owner, and generate income. They also learn to analyze business feasibility and make important decisions on business strategy not only for their own business but for the other group members as well. Building Capacity Since it started 6 years ago, Working Capital has continually refined it's practices and incorporated the learning into concrete systems which are available in a replication implementation. The new "hub" will be launched with one week of training during package along with consulting from lead staff to insure smooth program which program management, board, and other key stakeholders will be introduced to the program and the systems which are used in implementation. These include: custom loan administration software, hub directors manual, enterprise agent training manual, group development manuals, and the business curriculum. A two day on-sight field staff training will follow along with specialized training on loan administration. Once the program is up and running, Working Capital Hawaii will become part of a national and international network of Working Capital programs. Working Capital's replication strategy is designed not only to provide new sites with refined tools and practices, but it also gives them an opportunity to jump start a successful program from the vantage of an elevatedlearning curve. 0 WorrKing Capital Hawaii Organizational Chart Private, Federal, Stale and County fw~ding BISCA Board of Organizing Directors Committee ~ a g } ~ y ~ ~ q~i w~ ~ ti ~ Progl a>iyi ant1 ~'~oan'~~'~•~ce~i ' g ~ ~ f'~~Y41 ey ip t h~ x4 ~ X44 5r 6 i ~ .'k ~ r s~:', ~ i ~Sa ~-~,q ~~at~','~>~ za F~~~ r~ r~.~ r ~ t ~ t t ~ "dc " x >4.' y',r4~l w"~+.`i~,t ~~~xa ~5i~rkQa~`~~'~~~(~ `P fi'yLr ~~aConduc f~l'rogrt~nt ~v'ti~t dmiiil3~~i~ 11r~ ~ ~ " ` ° ` r°+n~ ~ ra 4~ k iu jt y pp~w11& xc 4~. y~ y, is rik~~'~~~~~ tv~ti~~b~ Su Pi~ll£1 ~1fy~Y~~ (S~I~B~~~~V~ l C~u~ r ~,l~ial~~ ~ttd t~o?il~~ir` rla~s 1tF d~v(~ ~ .z„ C 3 r i ~ P a ~.ixq~ kN+ 1PI#i~pT' 3. { t< r.~i, Y . Partners: Community Organizations 1-Ialnakua Puna Kau QLCC QLCC QLCC Social Ministries Social Ministries Social Ministries Local Groups Local Groups Local Groups and and and Lulerprise Ageut Enterprise Ageut Enterprise Agent Bus nes Sup ort G uNs Bu nes Sup ort Gr ups Bus nes Sup ort Gr ups •N Individual Borrowers ~N Individual Borrowers ~N •e y I I~hat ~s W~rkin Ca `t g ~M, al Working Capital is anon-profit lending program which provides the self-employed with an opportunity to: • Obtain a business loan • Build a credit record • Meet and share ideas with other business owners • Develop stronger business skills Since .1990, hundreds of business owners in communities throughout New England have participated in Working Capital. o Working Capital: ~ National Pccr Lcndiug Microcnlcrprisc Program rcllecting best practices from global models iucludiug Grameen Bank and Village Banking Active in: Massachusetts (91) ,Vermont (92) ,New Hampshire(92), Maine (93) ,l~lurida (94), Delaware (95), and Missouri (97) Started: in November 1990 by Jeffrey Ashe in Athol IVlassachussetswilh two Business Loan Groups 'Today 1997 serves over 2700 businesses with over 30001oans Lent $2.7 million -National Repayment at 97% Goal: Enhance economic vitality of lower income communities by providing grass roots businesses with the resources they need to grow Comprehensive Business Development program that combines credit, training, networking, and support to build micro businesseses Replication Model: Can be replicated in any environment, urban, rural, and with any ethnic group. All systems are packaged and computerized. • Group Development Manual • Enterprise Agent Manual • Business Training Manual • Loan Administration and tracking software • Consultation assistance on fundraising, program dcveiopment, and ongoing program management. T~t~ Bu~~ness Loan Grou The Business Loan Group A group of 4 to 10self-employed business owners • Group reviews and approves loans for each other • Meets regularly to share ideas, network and work on building business skills s Maximum Loan Amounts S$5,000 Interest on the loan = 12% A service fee is also charged for training, technical assistance and loan processing. x$3,000 For $500, service fee = $3/month or $18 Larger loans have slightly larger service fees. Total rnontl~ly payments for $500 loan: 4-month loan = $131.19/month 6-month loan = $89.27/month 5.,81, 500 L$1,000 58500 To be paid no faster than... 46 months 412 months 418 months 6-36 months 6-36 months Thy Decision-M a~kers Working Capital does not decide who can receive a loan, nor do we require a business plan or collateral. Instead the Business Loan Group is entrusted to: • carefully review loan applications ,using worksheets provided by Working Capital • make sound decisions as to whether a member's business can benefit from and repay a loan. Along with trust, the Business Loan Group takes on the responsibility of supporting each member and encouraging timely payment. Working Capital ensures repayment through one rule: for any member to get a loan, all members must be up to date on their loan payments. (Group members are not legally responsible for each ether's loans, Each individual borrower is legally responsible f~~ ` nwn loan.) 1. Warl~~n 1Ca ~fia g p I Pra~ess I. Information/Orientation • Information Meeting II. Working Capital Member Training • 1Zunning a loan group • Business Profile • Budgeting • Loan Practice III. Group Development Process (The activities listed below may take more than one meeting to complete) • Choose a group name • Develop bylaws • Elect and train officers • Apply for loans IV. Group Planning • Create a vision for the group • Develop six month action plan V. Ongoing Activities • Meet regularly to share ideas and business skills • Members who have paid off their first loan can apply for another (Assuming all members are current on their payments) • Update six month action plan