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GW “Chef” Chew loves to cook and is an ardent vegan. He combines the two passions through a new company, Something Better Foods, that has created a line of plant-based meats, from Philly cheesesteaks to fried chicken, as well as with a nonprofit Oakland restaurant, the Veg Hub.

Chew needed financial backing to get Something Better off the ground. That’s where Oakland’s Runway Project stepped in and lent him $20,000.

“That money was a blessing,” he said. It helped him land a manufacturing site in Vallejo. Runway also helped with advice, coaching him on his business and marketing plans. He’s now raising more money to prepare for a distribution deal he landed with Whole Foods for next year.

Runway offers loans and other support to help black entrepreneurs start businesses. Many startups tap friends and family for early money, but minorities often don’t have well-heeled personal or professional networks. While the median net worth of white households is $171,000, that of black households is $17,200, according to the Federal Reserve.

The racial wealth disparity “is a big gap,” said Claudia Viek, founder of the Invest in Women Entrepreneurs Initiative, a nonprofit that is not affiliated with Runway. “Providing that early-stage, more-patient capital meets an acute need. It’s a way to interject some balance in capitalism.”

Runway founder Jessica Norwood calls the loans “believe-in-you money” but hastens to add: “It’s more than the money part. This is a story about what it means to be friends and family to one another, to be in deep community with each other. This is saying to folks who have been chugging away that we believe in them.”

The enterprises funded aren’t pitching the next big tech thing. Instead they’re Main Street stalwarts with products such as floral arrangements, fashion accessories, apparel, artisan juice, handmade pies and skin care creams.

Runway’s approach sounds terrific, said Ben Mangan, executive director of the Center for Social Sector Leadership at UC Berkeley’s Haas School of Business, who has no ties to Runway.

“There’s a huge need for this kind of capital, and it’s almost impossible to find it,” he said. “We have a massive problem to solve when it comes to creating wealth for people who have a disproportionately small share. We need every smart, viable experiment we get.”

Runway is small. It’s made 13 loans over the past year — and so far has a 100 percent repayment rate. But it has big ambitions to spread nationwide, and is currently raising money and developing a model for that.

Runway’s five-year, no-collateral loans carry a 4 percent interest rate, and repayments are interest-only the first two years.

The Self-Help Federal Credit Union administers the loans. Community members can support loans by taking out certificates of deposit at Self-Help. As with all CDs, their money is federally insured. In lieu of collateral from the entrepreneurs, Runway raised philanthropic money to act as a guarantee — for every $1 it lends, it has $1 sitting in an account at Self-Help as a backstop.

San Francisco’s RSF Social Finance provided some of that backstop capital.

“It was a real moment of joy for me and for Jessica to do that,” said Lynne Hoey, RSF’s senior director of credit, adding that there’s “a multibillion-dollar market opportunity to fund entrepreneurs” who otherwise are shut out.

Along with the Runway loans comes help in the form of retreats, peer support groups and weekly coaching from Oakland’s Uptima Business Bootcamp.

Uptima co-founder Rani Langer-Croager chairs Runway’s credit committee, helping to identify and screen loan applicants.

“These loans have provided immediate impact for each of these entrepreneurs we work with,” she said. “People who might previously have had to put inventory on a credit card were able to have more-favorable terms to open brick-and-mortar stores, to buy vehicles.”

One entrepreneur bought a truck for her mobile florist business; another bought a vehicle for business-to-business deliveries; another opened a mall kiosk for her beauty products, and another opened a lemonade stand in a kiosk on Valencia Street.

Moreover, the initial funding helped Runway’s early cohort raise at least $100,000 more in backing. “It takes money to raise money,” Langer-Croager said.

Stevonne Ratliff got a $20,000 Runway loan last year for Beija Flor Naturals,an eco-friendly line of beauty products.

“You need capital to expand, but it’s pretty difficult to find,” she said. She was making all her products by hand, so she couldn’t make enough to supply large retailers. The Runway money allowed her to outsource production of her two top sellers — hair care products Creme Brulee for Kinks, Curls and Coils and Maracuja Beauty Milk.

Besides offloading the “soul-draining” manufacturing, she appreciated the mentorship. “You have a group of advisers working together for your success,” she said. “They’re saying, ‘Go for this, we’re here to support you.’

“It gave me confidence to go for things I wouldn’t otherwise have gone for because I was so cash-strapped,” she said. She participated in Essence magazine’s annual festival in New Orleans, a high-end beauty show in New York and a pitch competition in Florida — which she won, landing a $25,000 grant. “When you have money in the bank and support, you feel a lot more confident,” she said.

Norwood summed Runway up like this: “We’re at the intersection of love, finance and culture. We don’t just look at products; we understand people at their core.”

Source: San Fransisco Chronicle