Do you have big art dreams but a small bank account? Are you intimidated by the prospect of applying for a bank loan to launch or improve your art business? You don’t have to give up on your dreams just yet. In “Micro Funding for Macro Dreams,” Sean J. Miller explains how artists and other creatives are obtaining small loans from foundations, entrepreneurs and peers. Learn more about micro funding in the excerpt below or read the complete article in the 2016 Artist’s & Graphic Designer’s Market or on Artist’s Market Online.
Keep creating and good luck!
Micro Funding for Macro Dreams by Sean J. Miller
Micro grants and grass-roots funding programs are helping artists and makers achieve success.
Amy Peterson and Diana Russell walked into the Jam Handy building in Detroit, Michigan, last summer ready to pitch an idea to potential investors. The friends wanted to start a jewelry business called Rebel Nell, and employ women transitioning from homelessness. “We wanted the jewelry to be teachable,” Peterson says, “and we wanted to have complete creative input from the women so they could be really, truly the designers.”
As more artists look for ways to turn their passions into profit, they’re also looking for viable ways to finance their dreams. Today, getting a business loan or seed money to launch something like a small artisan jewelry company isn’t as difficult as it used to be, thanks to a growing cultural shift toward appreciation of local and small over global and corporate. That appreciation isn’t just happening among consumers, but among lenders and investors as well.
But a small creative enterprise is a different animal when it comes to capital, says Stephen Marotta, a researcher at Portland State University in Oregon. “It isn’t like in the past when you drew up a business plan, went into a bank, and either came out with a smile on your face or pounded your fists in the sand.”
Sure, you can fund your business by building a Kickstarter campaign or dipping into your 401(k), or begging mom and dad for a loan. Among other options now available are programs such as the partnership of ArtHome and Project Enterprise in New York City. This innovative
setup offers business training and a peer-lending program for local, low-income artists, with loans ranging from $1,500 to $12,000.
In the case of Peterson and Russell, without a small business track record the pair wasn’t able to approach traditional funding sources like banks, foundations, or government agencies. Detroit, though, is one of the cities at the forefront of a shift away from the traditional funding model for artisans, artists, and social entrepreneurs.
Detroit SOUP, for example, offers micro grants for local creative and community projects. The money comes from fundraising dinners that Detroit SOUP hosts. But there’s no high ticket price here—for just five dollars guests can judge presenters and award a grant. Peterson and Russell pitched their company at a July 2013 dinner, keeping their presentation light and making people laugh. When it came time to vote on the awardee, Rebel Nell received almost $1,500.
Peterson and Russell used the money to buy silver—the base metal for their jewelry—and then sold their first pieces for a $6,500 profit at a local market. “That money is really what we credit for being the catalyst for starting Rebel Nell,” Peterson says.
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As the artisan economy offers options to corporate-driven consumerism, it’s also driving the creation of alternatives to traditional banking practices. Crowd funding lenders such as Kiva Zip put lenders and borrowers in direct contact. Moreover, loans are interest free up to $5,000.
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Don’t be surprised, Marotta says, if larger corporations start moving in on the micro financing trend, especially since it doesn’t take much to fund an artisanal start up. “We’ve done some preliminary research on a maker’s collective in East Portland, Oregon. A good chunk of them [operate] below $20,000,” he says. “But there’s collective power in these small numbers.”
Back in Detroit, Peterson and Russell are ready for a busy holiday season. They plan to hire two more women by the end of the year to add to their three-person team of creative designers. “In the big scheme of loans and grants it’s not that much,” Peterson says of the $1,500 they received from SOUP. “But to us, that was the most important money we received, because at the time we were just an idea. It was a wonderful confirmation.”
Sean J. Miller is a journalist and playwright based in Los Angeles, CA.
Excerpted from the winter 2015 issue of Artists & Makers. Used with the kind permission of Artists & Makers, a publication of F+W, a Content + eCommerce Company.