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Farming has many joys, but steady cash flow is not one of them. Slow Money NC's innovative lending system has helped arrange 80 loans to nearly 40 borrowers in North Carolina, including many names you'll recognize.

How Carol Peppe Hewitt and Slow Money NC are raising funds for farmers, one loan at a time 

Collier Reeves (left) and Maryah Smith-Overman of Durham's Homegrown City Farms, which began in early 2012 with $2,000 borrowed through Slow Money NC.

Photo by D.L. Anderson

Collier Reeves (left) and Maryah Smith-Overman of Durham's Homegrown City Farms, which began in early 2012 with $2,000 borrowed through Slow Money NC.

It's a little after noon on a recent rainy Saturday in Pittsboro, and the Chatham Mills Farmers' Market is winding down. Children are dashing about while a band plays on the porch of the nearby Chatham Marketplace co-op grocery.

We're in the heart of Slow Money NC, a small but growing movement of radical microfinance. This innovative lending system has helped arrange 80 loans to nearly 40 borrowers in North Carolina, including Tucker Withington of Lilly Den Farm, which produces a variety of meats and produce.

Farming has many joys, but steady cash flow is not one of them. Withington and his wife, Mackenzie, needed to upgrade their meat packing labels to meet regulatory standards. This would cost $500. Meanwhile, Withington tells me, the Chatham Marketplace owed him money for some of his meat.

An elegant solution was arranged: A regular shopper at Chatham Marketplace loaned Lilly Den the $500. The grocery in turn issued five $100 gift cards to the lender, thus redirecting the payments the store owed Lilly Den. Withington issued a gift certificate to the lender to cover the interest payment, plus he made a small donation to The Abundance Foundation, the fiscal sponsor of Slow Money NC. And he got his new labels.

"So, basically, we took out the loan, paid off the loan, collected debt and the Marketplace got rid of debt, all in a five-minute transaction," Withington says.

If this is a small example of a Slow Money success, we were also at the scene of the network's largest financing gambit to date: the restructuring of Chatham Marketplace's debt.

The 7-year-old cooperative, located at Chatham Mills, is a popular place to shop for local, sustainable food. But the store was struggling under its debt load. Slow Money pulled together $400,000, with 16 individuals contributing $25,000 apiece in an investment club called Bringing It Home Chatham LLC. The resulting purchase of the loan reduced the monthly debt payments by a third, from about $7,500 to about $5,000.

The debt restructuring has been a contributing factor to the store's recent profitability, says manager Paul Griswold. After being unprofitable last year, he says, the store is showing a profit for 2013.

No wonder that on this day, which happens to be the seventh anniversary of its founding, the co-op's cafe is serving hot items from the grill at a 50 percent discount, with further discounts on the cans of Dale's Pale Ale that sit invitingly in the ice at the store's front.

The driving force behind Slow Money NC—which is the national pacesetter for the movement—is Carol Peppe Hewitt. The Pittsboro resident operates a pottery business with her husband, Mark, a noted master potter. She is a lifelong activist and entrepreneur and an organizer behind the Shakori Hills GrassRoots Festival of Music and Dance. This spring, Hewitt published Financing Our Foodshed: Growing Local Food With Slow Money (New Society Publishers). In it, she tells stories from the still-young history of Slow Money NC, which in three years has facilitated about $720,000 in loans to support local farming.

Hewitt's book tour will take her to New England and the Pacific Northwest. On June 15 and 16, C-Span Book TV will broadcast an segment with her and a Slow Money loan recipient, which was taped at Quail Ridge Books. And on Wednesday, May 29, she appears at Flyleaf Books in Chapel Hill.

Hewitt's energy and the force of her personality are legendary. She drives a biodiesel-fueled Volkswagen Jetta all over the state and beyond, spreading the message of slow money. Hewitt does not take a salary for her Slow Money work, although she tries to be reimbursed for her travel expenses. (She also has a part-time publicist.) Recently she was in New York City to moderate a panel at an urban agriculture conference at NYU, and a day after her return to North Carolina—she had to host guests in town for a wedding—I encounter her by chance at Chatham Marketplace, where she has popped in for the annual owners meeting. In front of the grill, she introduces me to a couple of young staff members and gently intervenes when several children fill cold fountain beverages into the relatively expensive disposable coffee cups instead of the temporarily unavailable reusable plastic glasses. ("Those cups are 10 cents each," she murmurs with exasperation.)

The concept of slow money emerged from a book by Woody Tasch called Inquiries Into the Nature of Slow Money. In it, Tasch offered the critique of American capitalism later made familiar by the Occupy movement, namely that we are living through an era of unprecedented transfer of wealth from local economies to the elite. In his core slow money principles, which he reproduces in his introduction to Hewitt's book, Tasch writes: "We must learn to invest as if food, farms and fertility mattered. We must connect investors to the places where they live, creating vital relationships and new sources of capital for small food enterprises."

In May 2010, while on a three-year tour to promote his book, Tasch came to Pittsboro's General Store Cafe to speak to advocates for sustainable agriculture. As Hewitt writes in her book, the "room was a Who's Who of North Carolina's leaders in the sustainable agriculture movement. There were farmers, developers, chefs and teachers."

Among those in attendance were Hewitt and her friends Jordan Puryear, co-founder of the Shakori Hills festival, and Lyle Estill, founder of Piedmont Biofuels. This trio of entrepreneurs was taken by Tasch's ideas about direct peer-to-peer lending as a way to finance local farmers, who are often strapped for cash and capital and are unable to get conventional bank loans.

According to Hewitt, Tasch told his audience that, for all the attention his ideas were getting—and all the Slow Money groups that were forming around the country—not one direct peer-to-peer loan had been made. Hewitt, Puryear and Estill resolved to be the first. Estill loaned $2,000 to a local baker for a commercial mixer, and two weeks later, Hewitt attended the movement's national gathering in Shelburne, Vt., and reported the loan. Shortly thereafter, she loaned a local restaurateur $3,000 to expand her restaurant. And Slow Money NC was born.

Slow Money NC is not a lending institution. Rather, it's a network that encourages face-to-face meetings between people in need of small loans with those who are looking to help. The loans themselves are peer-to-peer, in the form of promissory notes (occasionally secured with collateral). This is an important point—direct personal loans between friends do not require SEC filings, and regulatory issues are why Slow Money does not solicit investments.

Traditional business investments are often equity investments by venture capitalists. Such investors want an exit strategy, an opportunity to sell their stake and take their profits. This runs counter to the whole notion of slow money, says Hewitt.

"We don't want an exit strategy when we're trying to support a farmers," she says.

From the farmers' perspective, it's gratifying to borrow from someone invested in your success, says Withington. "There's a great obligation and reward to pay back somebody you know and somebody that was willing to take a gamble on you."

Instead of engaging conventional business financing, which is expensive, time-consuming and regulated, Slow Money NC offers networking opportunities in which loan seekers can explain their needs to prospective lenders. Once a relationship is established, a simple peer-to-peer loan takes place. Although lenders want information about the business plans, credit checks are not required.

The loans are made at very modest rates of interest—typically 2 to 5 percent—that are significantly less than conventional loans (which are nearly impossible to get, anyway).

"We catch things that fall through the cracks," Hewitt says, noting that Self-Help Credit Union has a microfinance program and the USDA "has a great grant program."

But not all businesses succeed, and Hewitt acknowledges that occasionally, a loan doesn't have a happy ending. One bad debt—and her efforts to collect it—is detailed in her book. Hewitt says that the three underperforming loans are all from 2011. "We're much more wary now of startups."

One such failed startup is Durham's Reliable Cheese Company, which closed last October and filed for bankruptcy protection. It received a $3,000 loan from Hewitt that has not yet been fully paid off, she says. "I realize there's a high degree of risk loaning to a startup," she says. "I expect they will pay me back someday if and when they can."

A much more common outcome, though, is a grateful farmer or restaurateur whose business is made easier with a much-needed piece of equipment, and a lender who has made a modest financial return on funds that were invested locally rather than being used in who-knows-what via mutual fund.

In addition to enabling the acquisition of ordinary tools like skid steers and bread mixers, Slow Money is an avenue toward reviving types of businesses that used to be a feature of every foodshed: for example, a brewer of a traditional Lithuanian spiced honey liqueur (who was profiled in the INDY last year). Another traditional industry getting a boost is a mill that grinds local grains into flours for use by bakeries and for retail sale. A year ago, an Asheville baker—and now miller—found $15,000 of Slow Money loan assistance to launch the venture, called Carolina Ground L3C.

Slow Money investors have also found themselves with an opportunity to revive two related, long-lost North Carolina industries: cotton and textile. Hewitt and a small consortium that came to dub itself The Cotton Club were sought out by TS Designs, a T-shirt maker in Burlington. The company was formerly a conventional apparel manufacturer, but after the 1993 passage of the North American Free Trade Agreement, which devastated many American manufacturing sectors and their unions, TS Designs reinvented itself as a green company. When TS Designs had an opportunity to buy North Carolina-grown organic cotton, it didn't have the cash ready. So Hewitt and a group of others stepped in to loan the company the $30,000 it needed to buy the harvest.

On Saturday, en route to Pittsboro, I also stopped at the South Durham Farmers' Market, a year-old operation set up at Greenwood Commons on Highway 55. I encounter Hewitt's influence, in the form of market manager Ben Filippo, a young representative of N.C. State University's Center for Environmental Farming Systems. He is wearing a T-shirt promoting the Center's "10 Percent Campaign," which sets a target for statewide consumption of local foods. The T-shirt is for sale, too, and it's indeed a product of TS Designs.

However, I'm here to meet Collier Reeves of Homegrown City Farms, and Filippo points me the way. At a cooperative stand, Reeves is selling produce with another farmer. She tells me about Homegrown, which she operates with Maryah Smith-Overman. They till two adjacent urban plots in East Durham, a total of a half-acre. Reeves, who studied agriculture at Warren Wilson College, describe the intense cultivation required by the tight spaces.

Their choice of an urban location is driven partly out of economic necessity, Reeves says, but it's also a ideological one. "We believe in growing food where the people are," she says. And in impoverished, largely ignored East Durham, she adds, "there is a lot of open space, vacant lots being mowed for nothing."

Homegrown's half-acre yields enough produce for about 20 CSA subscriptions, and their handful of restaurant clients includes Mateo Bar de Tapas and Six Plates Wine Bar.

It's a short but powerful conversation, as Reeves, who also works for Girls Rock NC and serves food at Panciuto in Hillsborough, describes the skills and side jobs she and Smith-Overman take on. Smith-Overman is also a woodworker; her handiwork is in Durham's new coffee shop Cocoa Cinnamon, yet another beneficiary of Slow Money NC.

Homegrown City Farms started in January 2012 with no capital, aside from the partners' skills and enthusiasm. They needed 40 yards of compost, a tiller, basic tools, seed and organic material for the soil. For this, they borrowed $2,000 through Slow Money.

"It was our only source of financing," Reeves says.

Some months after Withington's four-way, $500 transaction, he received his second Slow Money loan for Lilly Den Farm. This time, it was a much bigger one, for a skid steer (otherwise known as a Bobcat) to help with the heavy lifting at his Goldston farm.

He thought it would cost $10,000, but on a Thursday he found a used one in Greensboro offered for sale on Craigslist for $5,000.

"I called Carol and asked her if [the lesser amount] would make it easier to find a lender," Withington recalls. "She called me back on Friday afternoon and told me she had a couple in Chapel Hill who were committed to a loan and she was going to put me in touch with them."

"They came down [to Chatham Marketplace] on Saturday morning. We met for 40 minutes, and at the end of it, they each wrote a check for $2,500. I bailed out of the farmers market a little early, left my wife here, drove to the bank and cashed the checks, hitched up my trailer and drove to Greensboro to get the skid steer."

The lenders come visit him at the farmers market every four or five weeks, he says. "They come down and load up on meats. We got a loan for a badly needed piece of equipment for the farm and gained a really good customer."

Withington says he is ahead on his payments. "I try to pay a little bit more during good months, so I have a cushion when it's slower," he says. He secured his loan with the skid steer. "I prefer to borrow money to get something tangible," Withington says.

"I wouldn't borrow money for something like advertising or fuel. If I go belly up, I can sell the equipment and pay off the loan."

This article appeared in print with the headline "Radical finance."

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