New financing and support for rural microenterprise
By Patty Cantrell
Stacey and Larry Poe knew they had the skill, and the will, they needed to make a new life out of what could have been another economic downturn in their rural work lives. A different matter was whether they could find upfront financing to start the small business they knew was needed.
“My credit score was 530,” Stacey laughed. “I didn’t have a credit score at all,” Larry added, having paid cash for most things in life.
Stacey and Larry decided to go into business as Lucky Ducky Cleaning in 2021 during the Covid-19 pandemic after the commercial cleaning company that Stacey worked for shut down. Its state office building customers were left high and dry. Stacey recalls: “I pitched to the state: ‘Why not let the smaller guys doing this work take on the contract?’ …And they ran with it.”
The Poe’s are the type of “micro-entrepreneur” that west central Missouri’s New Growth community development corporation is focused on getting going and growing for rural community and economic development. Microenterprise businesses are typically too new, too small, or too credit challenged for traditional bank financing. Microenterprise businesses are also hidden assets for rural places struggling to provide goods and services – from unique gifts to commercial cleaning – that small town residents and investors want and need.
Character and Capacity
The Poe’s started Lucky Ducky Cleaning with a $5,000 loan from New Growth community development corporation. Less than two years later, the company has contracts with 10 government office buildings and employs a team of nine workers. Lucky Ducky Cleaning is filling a rural gap in cleaning companies with the capacity to take care of large 12,000- to 20,000-square foot office buildings.
The dedicated FedEx truck that delivers $2,500 worth of supplies to the Poe’s home every month is evidence of the management skill the pair is putting into the business along with long hours scrubbing floors and toilets. They built their management skills in part while working for minimum wage at factories in and around their home base of Nevada, Missouri; factories that have closed down and moved off shore.
Larry opens a supply closet and waves his hand at towering stacks of three-fold paper towels and toilet paper. Lucky Ducky Cleaning is responsible for purchasing not only the soap and buckets it uses for cleaning but also all the supplies, from garbage bags to soap dispensers, that the office buildings require.
Covering all those costs plus payroll means the Poe’s must come up with around $6,000 of upfront cash every time they bid on a new building contract, which will begin paying only after two months.
They’ve done it with just one additional $20,000 “step up loan” from New Growth on top of many nights and weekends earning extra money on additional commercial floor cleaning jobs. “New Year’s Eve, we’ll be cleaning another floor while everyone else is out celebrating,” Stacey said.
The Poe’s are building a financial and operational management track record that they can take to the bank. They are also building their credit scores; New Growth reports to credit bureaus so that microenterprise borrowers’ good payment history shows up and adds up.
New Growth’s then-Revolving Loan Fund manager Michelle Smith explained the calculated risk that New Growth took in 2021 on Lucky Ducky Cleaning.
“They were awarded three contracts off the bat,” she said. “They knew what they were doing, with experience in the business.” They were also willing to work with us on basic business building steps, she said.
New Growth’s SBA-designated Women’s Business Center helped the Poe’s set up their business legally, and get their bookkeeping and payroll systems underway.
The New Growth Women’s Business Center is a new and needed on-the-ground rural resource, serving men, as well as women. It joins a group of rural small business resource providers that New Growth has pulled together as the START HERE Business Acceleration Network. Partners connect and coordinate resources, and collaborate to “leave no rural entrepreneur behind.”
Technical assistance from START HERE partners combined with New Growth credit building and micro-enterprise financing is moving more rural entrepreneurs from business dream to business reality, said START HERE partner Kelly Asbury, Director of the Missouri Small Business Development Center at State Fair Community College. Based in Sedalia, she covers 15 rural counties.
“You could say we’ve tripled production,” Kelly said. Many rural clients she has worked with to develop business plans would not be in operation without New Growth’s microfinancing and credit building support.
Taking a chance on microenterprise
Small businesses in rural communities are mostly microenterprises like Lucky Ducky Cleaners, the local mechanics garage, the real estate agent, and the side gig Etsy artist shop.
Microenterprises are sole proprietors and businesses with less than 10 employees. They make up 75 percent of all firms in the country. Yet they fall under the radar when it comes to business and economic development attention. This is largely because microenterprises employ only 10 percent of all workers, and because of significant “churn;” many are going out of business while many are going into business.
New Growth’s executive director Sheridan Garman-Neeman explains that taking a chance on microenterprise is essential for rural development. It is also do-able; working with borrowers as neighbors, not numbers, is the tried-and-true “relationship lending” approach that banks are less able to do in today’s data-dominant age.
“You have to get to know the microenterprise borrower and what they can do,” she said. “We assess risk, but it’s not based on a credit score; it’s based on character and capacity, and the relationship we build.”
In rural places, every business counts, she adds: “When the flower shop closes, there are no flowers to order nearby for funerals or prom. Before long, there is no funeral home, no dress shop.”
Taking a chance on microenterprise is about building the dynamism of rural economies; about taking care of the goods and services communities need and building opportunity in every nook and cranny of a rural place.
Stacey and Larry Poe feel the same way about giving people a chance.
“We go after the ones who haven’t had jobs,” Stacey said. “It takes a certain type of person to do this work … more important than their past is that they understand that it’s their job to do their job.”
Larry adds: “It’s great we’re making money. My favorite thing, though, is watching people who work for us grow.”