Reopening Coffee Exchange after the 2018 fire that destroyed its building was never in doubt for owner Sarah Peters.
The question was how.
Before the fire, the five-year-old coffee shop on Montgomery Road had become a busy and beloved community gathering space, and the feelings were mutual for Peters and her family, who are deeply rooted in the neighborhood. Leaving Pleasant Ridge, either by calling it quits or moving to a new neighborhood, was never an option.
In fact, it seemed like a good opportunity to expand the flourishing business. Peters considered buying her own building; no locations were for sale. She found a new, much larger building to lease, but no bank wanted to provide a loan to a business that was just renting.
Insurance money covered equipment losses but not much else. Peters raised money through Go Fund Me, but still needed a loan. One option after another fell through, and she and her husband, Joe, started making contingency plans. Could they pull money out of retirement accounts?
Finally, in November, Peters secured a $287,000 loan through the Cincinnati Access Fund, a collaboration among private banks, the City of Cincinnati, and LISC of Greater Cincinnati. Coffee Exchange is set to open by early 2020 at 6041 Montgomery Road.
“We didn’t know what to do,” says Joe Peters, Sarah’s husband. “LISC was there to help us.”
Support small business, support community
LISC is a nonprofit organization dedicated to building resilient and inclusive communities of opportunity — great places to live, work, visit, do business, and raise families. Supporting small businesses is one major strategy for this work.
Small businesses create jobs. They create community spaces. They create opportunity.
“Those small businesses, they’re not just critical. They are the lifeblood of any community, the thing that makes a community unique,” says Jason Chamlee, president of the Pleasant Ridge Development Corp. and developer with The Model Group. “They're rooted in the community and invested in the community beyond just the business.”
In 2019, LISC supported 40 businesses through actual financing or technical assistance. Much of that support was building relationships between small businesses and organizations or institutions that could help them grow.
“With LISC, it’s all about relationships and partners,” says Amber David, LISC program officer.
Financially, LISC offers three tiers of help to small businesses. At the first tier are Kiva loans, crowd-sourced, zero-interest loans from $500 to $10,000 that typically help people transform their hobby or side-hustle into a full-fledged business. They require no cash or credit, and rely on the character of a business owner.
A $10,000 Kiva loan is how Ana Gallegos-Yavorsky was able to open a storefront in Norwood for Spanish Playdates, a bilingual child enrichment program she has been operating nomadically since 2011. Within weeks she had the money she needed to secure a home for her business.
“I was able to get supplies for the studio — a computer, chairs, tables. I was able to put a carpet in, pay the rent, and have health insurance. It gave me a cushion,” Gallegos-Yavorsky says.
“If this hadn’t worked, I would have had to find a different job,” she adds. “Right now, I’m investing in myself. With part of the loan, I’ve invested in my education, and I’m using the marketing strategies I’m learning to get more foot traffic in the studio.”
Helping businesses grow
Through the Cincinnati Access Fund, in partnership with Fifth Third and First Financial Bank, LISC offers two tiers of larger loans. The $3.5 million fund, established in 2018, is focused on supporting businesses that are minority- or women-owned and are struggling to find financing through traditional means.
Established but expanding businesses can secure loans of up to $100,000.
Loans from $100,000 to $350,000 are available for businesses that, on the surface, might not look like they need help, David says. Like Coffee Exchange, these businesses are well-established with a strong customer base, steady location, and sufficient equipment, but want to expand significantly or are going through a catastrophic experience. Coffee Exchange happened to experience both scenarios, however, some lenders would flag either as too much of a risk.
In addition to being willing to take on that risk, LISC uses a smaller debt service coverage ratio than traditional banks — a sliding scale of 1.0 to 1.15 percent vs. 1.25 percent. The debt service coverage ratio measures operating income available against debt, and calculates a business’s ability to produce enough cash to cover debt payments. The smaller percentage LISC uses might not seem like much, David says, but the difference can be huge for businesses operating on thin margins or still working to build equity.
For Coffee Exchange, the LISC loan was the critical piece toward rebuilding and expanding. Its new location is 4,200 square feet, more than four times the size of its old location. Coffee Exchange also will be the home of a community radio station, Ridge Radio, and podcast studio.
“You’ll be able to get coffee and look through a window and see a podcast being recorded,” Joe Peters says.
It will include a community meeting space as well as a baking and catering kitchens that will support other local entrepreneurs.
“Coffee Exchange is the anchor that every community needs,” Chamlee says. “This kind of project doesn't happen without LISC and the sort of (financial) products they create."
The series, Community Stories, is supported by LISC Greater Cincinnati. Learn more at lisc.org/greatercincinnati.
LISC supports contributing journalist, Hillary Copsey. Read more stories about community development from Hillary here.