New partnership gives Hill District entrepreneurs a boost
September 23, 2012 4:00 AM
Barbara Strothers, owner of Grace Security LLC, is applying for a grant through Urban Innovation21.
By Deborah M. Todd Pittsburgh Post-Gazette
After more than 14 years of protecting One Hope Square in the Hill District, security officer Barbara Strothers decided it was time to lend her experience to the entire city by starting her own business.
Knowing that passion and professional background alone wouldn't be enough, in June she enrolled in a seven-week course through private/public community development organization Urban Innovation21 that drilled her on the financial and regulatory knowledge she would need.
By the time August rolled around, Ms. Strothers was the owner of Grace Security LLC.
The two-person operation has taken on a few contracts, and Ms. Strothers said she would like to expand but isn't in a position to do so yet. "We need to hire," she said. "We have applications and resumes, we have clients, but we can't hire just yet."
While Urban Innovation21 has been helping businesses like hers for years, a new partnership with micro-lending group Kiva Zip is connecting more entrepreneurs in the Hill District with vital sources of capital.
Urban Innovation21 is a new trustee for Kiva Zip, a subsidiary of San Francisco-based global micro-lending organization Kiva. The partnership allows Urban Innovation21 to endorse eligible Hill District business owners for interest-free loans of up to $5,000. Kiva Zip uses crowdsourcing to promote an entrepreneur's business and raise money toward its fundraising goal.
Founded in 2005, Kiva has made $325 million in loans to more than 800,000 entrepreneurs in 60 countries. Many of those loans were funded through donations as small as $25 from private lenders. The organization has a 98.9 percent repayment rate.
Hoping to get the word out about its new role as a trustee, Urban Innovation21 is hosting a grant competition that will put up to $50,000 in the hands of Hill District business owners.
Prizes include one $10,000 grant award, six awards of $5,000 and up to 20 $500 match awards toward a Kiva Zip micro-loan of up to $5,000. There also will be three technical support awards that help businesses raise funds through an unnamed crowdsourcing site. Applicants must reside in and/or operate their business in the Hill District.
The Hill District competition is being funded by The Heinz Endowments and the Richard King Mellon Foundation, but Urban Innovation21 has teamed up with the New York-based Surdna Foundation to launch a similar competition for Homewood business owners before the end of the year.
While Ms. Strothers is obviously gunning for the Hill District's big prize, she said she would be pleased if she were chosen to receive any amount.
"It would truly help us get things done a little faster than what it's taking us now. We could hire people right away, get them the uniforms they need, we would be able to have money to pay people to go out and do their work," she said. "We're going for it, and I hope that we'll be one of the ones to get some of it. I'm not greedy; I don't need it all. I'll take what I can get."
Urban Innovation21 president William Generett Jr. said the grant contest will help new or struggling businesses take advantage of a technology sector that has emerged in the Hill District thanks to grants from the Pittsburgh Central Keystone Innovation Zone program.
"What we're excited about is whether it's Uptown or the mid-Hill, this growth is being seen all throughout the Hill District. As things change in a positive direction, our community-based businesses get an opportunity to start up, grow and expand," he said.
Businesses have to cater in some way to new tech and energy professionals that occupy Fifth Avenue and Hope Square to qualify for the grant competition, but requirements are purposefully broad.
Supply chain businesses involving manufacturing, distribution or transportation are welcome, but so are coffee shops, restaurants, retail and service business. More than anything, talent and potential to succeed are what will put candidates on the top of the list, Mr. Generett said.
"We're looking for people that really have the ability to put their idea into action or -- if they have an existing business -- have the ability to take that business to the next level," he said.
Realizing new business owners may need help with a requirement for written entrepreneur profiles, business summaries and business plans, Urban Innovation21 teamed up with Duquesne University's Small Business Development Center and the University of Pittsburgh's Institute for Entrepreneurial Excellence. It also has partnered with the Hill Community Development Corporation to get the word out to potential applicants and to follow up with awardees to support their success.
Mary McKinney of Duquesne's Small Business Development Center said the grant opportunity and the chance for micro-lending can help to fill funding gaps that have persisted in distressed communities for years. She said micro-lending programs are not bound to the same regulatory and credit requirements as traditional lenders and that flexibility will allow people who have little hope for help from a bank to have a legitimate shot at a loan.
"I think this opportunity really fills a gap and a void that's been there for a while," she said.
Jonny Price, program director for Kiva Zip, said it was created specifically to address funding gaps that are too large for the average small business owner to fill himself, but too small for large banks to take interest.
Launched last November in Kenya and the United States, Kiva Zip uses community development organizations such as Urban Innovation21 to serve as trustees to identify potential borrowers and vouch for the borrowers' credit worthiness. So far, Kiva Zip has made about 3,000 loans.
Urban Innovation21 is Pittsburgh's second Kiva Zip trustee; Garfield-based co-working space Catapult PGH became a trustee in July.
Mr. Price said the new model "pushes the edges of conventional banking" by giving trustees the power to consider an applicant's character. Additionally, trustees earn the right to endorse more people for loans by gaining support from Kiva Zip's community of lenders and business owners, which usually comes when a trustee proves they recommend viable borrowers.
Mr. Price said small business owners have the additional advantage of marketing their business through Kiva Zip profiles and of making mentors and friends out of lenders.
"I'm blown away by the positivity and supportiveness of messages lenders exchange to borrowers. I've heard from borrowers that those messages of support are really meaningful and uplifting," he said.
Once some of those lenders give Hill District businesses a chance, Mr. Generett believes those business owners will in turn support community residents that traditional employers might not take a chance with.
Ms. Strothers believes there's no other way to operate.
"I want to put the jobs out there to help young people -- not just young women but young men, too, that need a chance," she said. "Just because they made a mistake that doesn't mean they don't want to do better."