The Progress Fund lends a helping hand on Main Street
Progress Fund CEO David Kahley (right) with Rod Darby, owner of The Trailside, a restaurant and bar along the Great Allegheny Passage Trail in West Newton.
The Trailside restaurant is at 108 W. Main St. in West Newton. This sculpture, made out of old railroad spikes, is a tribute to an anonymous frontiersman."
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Whitewater rafts and canoes aren't the type of collateral that traditional lending institutions look for when small businesses seek financing. Finance professionals would rather see real estate or equipment on the loan application.
But David Kahley, chief executive and co-founder of The Progress Fund, a Westmoreland County community development lender, said his fund had helped boost the tourism industry in southwestern Pennsylvania and adjoining states by making loans to recreation enterprises even when banks wouldn't touch them.
The Greensburg-based fund has loaned $35 million in 14 years -- primarily to tourist-oriented businesses such as restaurants, bed and breakfast lodgings, and outdoor adventure providers in Pennsylvania, West Virginia, Maryland and Ohio.
Last week, the fund was one of only eight organizations in the country and two in Pennsylvania to receive funding from the U.S. Department of Agriculture's Rural Microentrepreneur Assistance Program.
Progress received $600,000 -- the largest award of any in the country -- that includes $500,000 in loan financing and a $100,000 grant.
The fund plans to use the money to make 10 loans of $50,000 apiece to startup or existing businesses in small, rural communities where, Mr. Kahley said, "tourism-type businesses are on the upswing and going strong."
He launched the Progress Fund in 1997 with Karen Post, now its chief financial officer, with a vision of securing financing for tourism-related ventures. "They're not the typical operations banks are comfortable with," he said. "But they provide good jobs in small towns. People who start these businesses stay in the community, become community leaders and hire people. These jobs don't go offshore. They stay here."
Mr. Kahley described the fund as "not a government agency but we get government funding." Sources include federal and state agencies that target economic development.
It also receives funding through some commercial banks and foundations, including the Richard King Mellon Foundation, McCune Foundation, Benedum Foundation, Katherine Mabis McKenna Foundation, William Randolph Hearst Foundation and F.B. Heron Foundation.
Besides providing loans -- currently at an interest rate of about 6 percent -- the Progress Fund assists entrepreneurs with business training and coaching.
Among the success stories in its portfolio is Wilderness Voyageurs of Dawson, Fayette County.
The company had offered whitewater raft excursions on the Youghiogheny River for decades when it decided to promote historic, narrated tours on the water.
The Progress Fund lent the business $20,000 to renovate a historic bank building in Dawson for its headquarters and $30,000 for a new van and rafts. When the economy crashed in 2008, the company didn't suffer, Mr. Kahley said.
"People continued to travel" during the recession, especially to destinations they could reach by car, he said. "They went to places in the state, more local. The big troubles were in Las Vegas, places people had to fly to and stay overnight."
Wilderness Voyageurs -- which since obtaining its initial $50,000 from the Progress Fund has diversified into bicycle rentals, fishing tours and kayak excursions on 15 rivers in three states -- saw revenue jump by 8 percent last year.
The Progress Fund lent its owner, Eric Martin, another $331,000 to finance a pub and a lodge, both in Ohiopyle.
Besides businesses such as rafting and lodging that generate most of their revenues from tourists, the Progress Fund lends to entrepreneurs trying to survive in small towns.
"We like traditional main streets," said Mr. Kahley. "We'll lend to the clothing outfitter or the certified public accountant or the people restoring commercial properties there."
To that end, it has funded a conference center, a coffee shop and other enterprises along the historic business district of Bedford, and it's in discussions to fund redevelopment efforts in downtown Greensburg.
There have been failures. Of its 341 loans, about 2 percent have soured.
"When we started this, a lot of people thought we were destined for failure," said Mr. Kahley, who previously worked at Pittsburgh History & Landmarks Foundation and as executive director of the Port Townsend Main Street Project in Washington state.
After spending about a decade in that coastal community on the Olympic peninsula west of Seattle, Mr. Kahley realized an economy reliant on thriving art galleries, boutiques and hotels "can be strong and people can make a phenomenal living."
He returned to the Pittsburgh region to be closer to his wife's family and co-founded the Progress Fund with that tourist-based economic model in mind.
"Our borrowers have been phenomenally strong businesses. All the doomsday about tourism was ill-informed. I'm just glad it worked and [that] people understood it."Among its latest efforts is a program with Chatham University's Center for Women's Entrepreneurship to provide online assistance for female business owners in the Laurel Highlands.
The Web-based venture, funded by The Benedum Foundation, will target entrepreneurs who might have trouble commuting regularly to classes and programs at Chatham's city campus. Other partners include The Trail Town Program and Laurel Highlands Visitors Bureau.
"My hope is that these businesses become really smart about tourism. With more and more people involved like those at Chatham, I think we'll create an intellectual infrastructure to help these businesses. The more the region focuses on tourism, the more it's becoming a stronger industry."
First Published March 17, 2011 12:00 am