Oakland Food Policy Council

Last week I attended the Oakland focus group for Feed the Hunger Foundation’s new program, the California Food for Thought Microcredit Loan Program. The idea behind Food for Thought is to “provide microcredit to low income borrowers in the food system whose goal is to better their communities and provide healthy food for all.” This has some strong similarities to the Fresh Food Financing Fund model that has worked so well in Pennsylvania and other communities, with one important difference – the Food for Thought loan fund will be financed exclusively through private dollars. The founders hope this will allow them more flexibility in the kinds of loans they approve, and the kinds of borrowers they can work with.

The literature for Food for Thought describes a vision for regional food systems that give those in poverty the “opportunity to use their industriousness, their skills, and their character to start or maintain a business.” This vision encompasses people and businesses at every link of the food supply chain. And looking around the room at the focus group, I saw a great cross-section of the food system represented: independent truckers, café owners (and aspiring café owners), business development consultants, grocery store managers, food manufacturers, urban farmers, and many more.

Starting the week of July 28, 2010 the Food for Thought program will provide loans of $5,000 to $15,000 that can be repaid over approximately three years, though they will work with each individual borrower to design terms that work the best for that borrower. Interest rates will be around 11%. This is lower than the 12-15% typical of traditional loans, and much lower than the 22-25% interest charged on microcredit by for-profit lenders in other parts of the world. One group even reportedly charges an astronomical 80%. Even though 11% is a comparatively low rate, borrowers will need good business development support to be able to repay their loans. FTH hopes to break even on the loans, and be able to lend the capital out again each time a loan is repaid.

After submitting an application, a borrower’s next steps would include creating a business plan, getting a credit report, providing past income tax returns, and potentially providing a UCC lien check for collateral. Since FTH wishes to lend to people who have not been able to gain access to credit through traditional lenders, technical assistance on these steps will be critical to success for new entrepreneurs who have great energy and passion for the work, but who haven’t had the opportunities to learn these kinds of business skills. Perhaps some of FTH’s partner organizations will be able to provide this kind of support.

This new endeavor is supported by Congresswoman Barbara Lee, whose District Director Anne Taylor came to the meeting and read a statement from the Congresswoman emphasizing the need to invest in initiatives that bring healthy food into our communities. Her statement also mentioned our need for a statewide alternative food system comprised of food businesses all along the food supply chain. The Congresswoman recently took the “food stamp challenge”, living on a $21/week food allowance to learn firsthand the challenges of attempting to get by on food stamps.

The toolkit for building and financing a food system that works for all people is getting more diverse. With this loan program set to launch this week, ongoing efforts by groups like Inner City Advisors, ALBA, and many others, and growing momentum for establishing a Fresh Food Financing Fund in the region as well, aspiring entrepreneurs should have more and more options for attaining start-up capital and technical assistance.