We started our small business loan fund to meet the needs of small businesses that wanted to grow and create new jobs for working people. But for one reason or another, these small businesses were unable to secure capital from a traditional bank, credit union, or the Small Business Administration (SBA). PCV uses the venture capital model of pairing our capital with pro bono expert business advising, to help our small business owners grow sustainably — and once they’ve grown to prepare them to access more traditional sources of capital.
We’re happy to announce that model is succeeding! Two of our loan fund borrowers, Gravel & Gold and Bamboo Asia, have successfully repaid their loans, and are now growing as fully bankable companies.
Gravel and Gold
Gravel and Gold is an independent retailer in the Mission District of San Francisco. Founded by three women in 2008, Gravel and Gold has cultivated a large following among the neighborhood’s artistic and fashionable shoppers by selling handmade and locally-produced clothing and accessories. Dedicated to the maker movement, the founders expanded their network of artisans by hosting workshops in their shop and highlighting their peers’ work on their online blog.
At the end of 2012, they began selling Gravel and Gold brand clothing and cloth accessories in the shop, on their website, and through other retailers scattered across the country. As a result, the company increased their sales revenue substantially. Although the team was delighted at the windfall of orders, the company was not financially prepared. They originally anticipated one small production run would cover the entire year. However, after selling out of Gravel and Gold products mid-year, they ran a second costly production run which hurt the company’s year-end margins.
The owners approached PCV for a loan to help them prepare for a large production run in summer of 2014, enhance their website, and make improvements to their retail space so they can better showcase the Gravel and Gold line. Now, their sales have continued to grow, the company is doing better than ever, and they’ve repaid their PCV loan in full.
Bamboo Asia
Sebastiaan van de Rijt owned and operated ten fast-casual Japanese food restaurants in his home country of Belgium. Upon arriving in San Francisco in 2011, he saw an opportunity to replicate his model and offer a unique fast casual Asian fusion restaurant in the Financial District. In July 2011, Sebastiaan launched Bamboo Asia, an innovative restaurant with three micro-stations within the same space offering Indian, Japanese, and Vietnamese cuisine.
Sebastiaan and his former business partner personally funded the restaurant in its startup stage without the need for outside debt. With his extensive restaurant experience, Sebastiaan grew Bamboo Asia’s revenues in 2013, and the restaurant became profitable in January of 2014.
Although the restaurant has been very successful in drawing a large lunch crowd, Bamboo Asia wanted to boost its happy hour and dinner revenue.
Sebastiaan came to PCV seeking a loan to support a rebranding effort and an interior design project, which helped them market Bamboo Asia as both a fast casual lunch establishment and relaxed casual dinner establishment. That work is now done, and Bamboo Asia continues grow, having just repaid their PCV loan.
Why Are Loan Funds Like PCV’s So Important?
It’s harder for small business, especially if they’re women-owned, minority-owned, or might have imperfect credit, to get working capital.
According to Forbes, “Small business loans on the balance sheets of banks are down about 20 percent since the financial crisis, while loans to larger businesses have risen by about 4 percent over the same period.” And over the last seven years, one of every four community banks has disappeared. That’s 1,971 fewer small, local financial institutions today than before the Recession. Most were acquired and absorbed into bigger banks.
CDFIs like ours step in to that gap. We help small business owners in the stage between startup and large-scale growth. We operate in the center of this changing landscape between traditional banks and the SBA, and higher-interest-rate online lending.