Worth a read: How CircleUp Is Filling The Void Left By Banks That Won’t Lend To Small Business
I ran across this article today – don’t you love seeing people solving problems, creating new models and causing upheaval? Kiva.org, Indigogo, Grameen America… These are some of the ones that come to my mind. (And all of these are individual people, groups, getting together voluntarily, whether they are non-profits, for profits. Government solutions would take years and would be bureaucratic before they even started. It’s the voluntary sector, the ‘freer’ market that allow problems to be solved ultimately. More pressure to replace what no longer works!)
Here’s a quote from the Forbes piece:
“No banks want to give a company like mine a loan – we’ve got great growth rates but profitability’s not there yet,” he says. “They have a box and we don’t fit into it.”
In fact, big banks approved less than a fifth of all requests for small-business loans they received in January. Small banks approved about half of applicants, according to a survey by Biz2Credit, an online platform that matches businesses and lenders.
Social Enterprise – such a fabulous creation coming out of the free market
Why not solve social problems with for profit businesses?
Better than government options – private organizations can adapt, change and improve much more easily. If your organization messes up or is wasteful, someone else can compete with you and do it better. for government organizations – if you are wasteful or mess up, odds are there will be an investigation and then you’ll get MORE money and influence (think FEMA, think HHS, think Education, list goes on and on).
Better than non profits, perhaps? A for profit model gives you a sustainable income stream (often better than doing grant proposals, competing for donors in tough times). The modern publicly listed company is an artificial construct and most folks have forgotten the free market is capable of infinite other models. The social enterprise movement is a fantastic new approach. The idea that ‘for profit’ companies means your somehow compromised and unable to change the world is antiquated and false. And the idea that maximizing shareholder value = money, well, why? Social Enterprises are voluntary associations – no one’s forcing people to buy shares, the profit goals are written into bylaws… More power to them.
Bye Mom, off to school!
Here’s one I like: Kunskapsskolan – a private school “social” enterprise – aim for 10% profit each year, give 90% of revenues to school principals to manage. They have only gone into blue collar areas because, as the CEO says, they’re not catering to the rich. They want to improve school for the average child since public schooling is failing. Sweden overall isn’t a perfect model for education, but this social enterprise looks very promising.