How Our Community Re-Financed Our Grocery Co-op: A Slow Money Success Story

Posted on Tuesday, December 27th, 2011 at 9:00 am by admin

We love to share Slow Money success stories like this one from North Carolina. If you’ve got one to share from your community, let us know! Just fill out our web form here.

This article was reposted from Sustainable Grub, written by Dee Reid.

It all started when Chatham Marketplace had a financial obligation looming. The Pittsboro-based co-op grocery was facing a $300k balloon payment on its start-up loan.  The note would come due in about a year. The bank might be willing to re-finance, but there was no guarantee about that, or whether the Marketplace would get the same terms.

Then Carol Hewitt recalled a great idea that came up a few months earlier when she was first co-founding Slow Money NC, the Pittsboro-based initiative that facilitates peer-to-peer community-based loans. Chatham Marketplace Finance Committee member Paul Finkel had suggested re-financing the co-op’s loan through individual lenders in the community.

Slow Money wasn’t ready to take on something that big last spring, Carol said.  But by fall, Slow Money had already facilitated more than a dozen micro-loans to farmers and food entrepreneurs. Maybe they could tackle the Chatham Marketplace loan after all.

Carol and Slow Money co-founder Lyle Estill began crunching the numbers. They would need to find 16 individuals willing to loan $25k each at a 4.5% interest rate. Each lender would receive equal monthly payments over an eight-year period, and the loan would then be retired.
Slow Money NC would help them aggregate their funds into one pool that could be managed centrally. That’s when Bringing It Home Chatham LLC was formed.

It didn’t take all that long to line up 16 lenders, Carol said. The folks who had helped start the Marketplace– Tami Schwerin, Melissa Frye and Katherine Conroy– met and suggested names. It was a community effort and one-by-one people agreed to participate. The loan was attractive to them for several reasons:  They believed in putting their money to work in the community. Many of them had already made micro-loans through Slow Money NC and they felt confident their funds would be repaid.

They knew the risks associated with supporting a small local business, Carol said, but they would rather see their money working on Main Street than riding the recession roller coaster on Wall Street. And, they would be getting a better return on the Marketplace loan than they would from a savings account or CD.

The loan was also a very good deal for Chatham Marketplace. It locked in a much lower interest rate, reducing the grocery’s monthly payment by 1/3. That means a savings of about $2500 a month – no small change for any food enterprise in these times.
“Now Chatham Marketplace is locally financed by people in the community who care deeply about its success,” Carol said. “That means we will do whatever we can to help the Marketplace succeed.”
“Bringing It Home Chatham is one of the first projects of its kind in the US,” Carol added. “It’s just the beginning of finding new and better ways to keep local food growing here in Chatham County and beyond.”

If this story inspires you, check out our book Inquiries Into the Nature of Slow Money, and stay tuned for our forthcoming book, Local Dollars, Local Sense.

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