With government grants disappearing and banks more reluctant to fund small businesses, local communities are seeking new ways to find investment. Crowdfunding isn’t the only way to get projects off the ground. There are other ways to encourage investment.
Clare Goff, editor of New Start magazine, shows five interesting ways to boost local investment:
- Create local investor networks. The first Local Investment Opportunity Network (Lion) was set up in Port Townsend in Washington. A Lion network is a group of local citizens who come together to help fund and support local businesses. They are now spreading across the US.
- Ask the crowd. Crowdfunding ‘“ where local people and businesses are invited to fund a project ‘“ has been filling the gap as regeneration budgets are slashed. Locals are backing creative ideas that might previously have struggled to get off the ground; plans to turn a flyover into a public space in Liverpool raised over £40,000 on crowdfunding platform Spacehive and a water slide was erected on a main shopping street in Bristol on the May bank holiday weekend after more than £5,000 was raised. More standard regeneration projects are also finding investment with the help of the crowd.
- Launch a small business fund connected to a time bank. The Arroyo SECO community revolving loan fund is the first small business micro-loan programme funded and managed by a timebank. Recognising the fact that many small businesses were setting up as a result of the skill shares and exchanges within the timebank network, it decided to offer loans to members running or setting up small businesses and co-operatives. Loans range from $500-$5,000 ( £297- £2,969) and are aimed particularly at women and those in economic distress as well as ventures that fit with the timebank ethos. The loans are paid through the timebank’ s credit union partner, with loans fees paid in time credits to the timebank.
- Let the community take shares. Increasing local businesses are turning to their local communities for funding. The amount of equity raised through share offers in the UK trebled to £9m in 2012 and large-scale share offers in particular are on the rise. The vast majority of share offers undertaken by community enterprises have been in the renewable energy, retail, pubs, brewing, food and farming sectors.
- Keep the spend of institutions such as hospitals and universities local. Evergreen Co-operatives in Cleveland Ohio has harnessed the spending power of local hospitals and universities to rebuild its economy. Working with institutions to help them localise their spend, it has set up a number of co-ops to supply laundry services, energy and food from within the local neighbourhood.