At 17, Sonja Thornsberry dropped out of school to marry her high school sweetheart. For years her husband brought home a steady wage from the coal mines of southwestern Virginia, and she happily raised their three sons. Life was good. Then one day her husband was injured and out of a job. "I had three teenagers and I needed money," says Thornsberry, "but I had nothing to offer the world."

Near her house in Swords Creek stood a thriving used car lot. Inspired by the idea, in 1991 Thornsberry bought an old car for $600, cleaned it up, advertised it on the local radio swap shop, and sold it for $1,200. She bought a second car. Again she doubled her money. Her confidence stoked, she got a used-car dealer's license and purchased two more cars. "For quite a while though,"she says, "the business looked foolish."For 23 months she sewed at a clothing factory from 7:00 a.m. to 3:00 p.m. and sold cars from 3:30 p.m. until "whatever it took."Slowly, sales at Family Motors Sales, Inc., took off.

In 1996, after five years in business, Thornsberry grossed $110,000—and hit a wall. Her customers had little money and often tarnished credit histories. They needed financing but couldn't get it from a bank. Thornsberry figured if she could finance their purchases as big car dealers did, well, she'd grow her business and help her customers at the same time. But there was a catch: to do that she needed money and inventory, both in short supply. "I figured the sky was the limit if I could get some working capital," she says. Thornsberry approached the Small Business Administration. "They laughed me right out of the office. They just couldn't picture a four-foot- eleven-inch-tall woman with seven cars on her front lawn succeeding."

And there things might have stayed, another promising small business slowly starving to death for lack of capital. But Thornsberry turned to BusinesStart. Run by the Abingdon-based nonprofit community action agency People Incorporated of Southwest Virginia, with funding from the Appalachian Regional Commission (ARC) and others, BusinesStart provides business training and small loans to entrepreneurs in 18 counties in the mountains of southwestern Virginia and northeastern Tennessee.

Over the last six years, BusinesStart has provided its Business Basics training to 1,400 people, loaned $1.6 million in average amounts of $14,000, and created some 380 businesses and 1,000 jobs, generating about $1 million a month in goods and services, most of which stays in the community. Its Appalmade craft division develops and markets the work of about 180 rural crafters through its retail shop, large national crafts shows, and churches. And its recently launched Individual Development Account (IDA) program hopes to train people with low incomes in money management by matching their savings toward a home purchase, higher education, or the start of a business. Although the IDA program is only in its infancy, the first few participants have saved nearly $5,000 of their own money.

Helping Create Jobs

BusinesStart began in 1993. For years People Inc. had sponsored traditional community action services, such as Head Start, and low-income-housing and employment-training programs. But in the early 1990s, as the coal economy waned, People Inc. President and CEO Robert Goldsmith began to think that educating people and housing them wasn't much good if there weren't any jobs to support them. And while chasing big factories was all well and good, he thought creating a lot of small businesses might be an idea better suited to the area and its people. He created BusinesStart to help make that happen.

Training is the foundation of the program. Before entrepreneurs can apply for a loan, they must take Business Basics, a 12-hour class taught by BusinesStart's business development specialists. The classes meet four times, three hours each time, during the day, evenings, and weekends, throughout southwestern Virginia. "We view the classes as a service to the community,"says BusinesStart community and economic development director Welthy Soni, "and we make them really accessible."

Participants in a recent class included entrepreneurs interested in opening a diverse range of businesses, including a winery, a two-way radio dealership, a day-care center for senior citizens, and a roofing business. Costing $45 and open to anyone, the classes cover everything from business concepts to potential markets, competition, business location, taxes, insurance, cash flow, balance sheets, and business plans.

"The training really got me focused,"says Richard de Montebello, a start-up comic book publisher whose two "Browser and Sequoia" comics have sold 65,000 copies. Now trying to expand into the toy business to merchandise the characters in his comics, de Montebello recently received a loan from BusinesStart and is also raising money by selling limited partnerships in his company, an idea gleaned from the course. "Many [entrepreneurs] are very green, and we try to make them look at their business venture honestly,"says Deborah Loggans, one of BusinesStart's business development specialists. "And sometimes the class is a success if you talk someone out of going into business."

When the class is over, some people are never heard from again. Some open businesses on their own without taking loans. Some, like Sonja Thornsberry, come to BusinesStart seeking capital. By definition, most of them are, as loan origination officer Darlene Hagy says, "unbankable."They have little income, poor or no credit history, and no standard collateral, such as a house, with which to secure a loan. But where a bank may see only a bottom line, Hagy sees a human face. "I do more than take paper,"says Hagy. "I spend time with them and talk about their dreams. And we don't 'deny' loans. We identify weaknesses and strengths."

Boosting Strengths

Hagy pulls a credit report and works with her clients to clean their credit histories where possible and to boost their strengths—by creating a better business plan, for instance. It is ultimately a subjective, intangible process. "We do 'due diligence' as best we can," says Soni, "but when all is said and done, they're character loans." Currently three points above prime (11.5 percent), BusinesStart's loans are relatively expensive, and if clients are bankable in some way, Hagy sends them elsewhere. "We're not cheap money," cautions Soni. "We're accessible money."

Once Hagy thinks an application will pass muster, the staff reviews it. If they recommend the loan, the application goes to the loan review committee, which is composed of both local commercial bankers and advocates for low-income individuals. Once approved, the loan is just that, a loan, with strings attached, and it's the program's ability to be both compassionate and tough that makes it successful. "Our clients have to understand that if you're in business, it's not all fun and games,"says Soni. "We have to say, 'We're going to be tough on you so you'll be tough on your customers.' "

BusinesStart examines its clients' books monthly and maintains a full-time loan servicing officer who ensures that the loans are repaid. Indeed, no matter how poor, clients must secure the debt with something, whether it's their television or business equipment or car. "A woman in Grundy wanted to borrow $25,000 to open a storefront pet shop,"says Loggans, "but the applicant has to be able to pay off the loan even if the business dies. And there was no way she could do that. So we said, 'Go back and see what you can do on $5,000.' Sure enough, six to eight weeks later she came back with a plan based on a $5,000 investment. Now, starting a storefront business on $5,000 is tough, but she is so frugal and has such street smarts that I think she can do it."

BusinesStart's policies seem to be working: of $1.6 million loaned to date, over $800,000 has been paid back (to be loaned again), and only about $40,000 has had to be written off.

Rod Wicker is typical of the entrepreneurs BusinesStart has helped. "I was underground in the mines for 19 years,"says Wicker, pausing in the midst of the lunchtime rush at Wicker's Manna, his Honaker, Virginia, restaurant. "And I'd always dreamed of having a little restaurant, but when I got laid off I didn't have any business experience at all."Wicker attended the Business Basics course and borrowed $25,000 over five years. "Business Basics training was the key to our success; the projections we did in my business plan turned out real close. Really, without BusinesStart we would never have made it at all, and we've grown a bit every single year."

And Sonja Thornsberry? After attending BusinesStart's training class, Thornsberry received a $25,000 loan, capital that acted like wind on a smoldering fire. Family Motors Sales doubled its gross in 1997, and in 1999 sold nearly a half-million dollars' worth of cars. "The class and the loan were priceless,"says Thornsberry, whose modest plaid skirt and old-fashioned bun can't disguise an ambitious, razor-sharp businesswoman, "and I only wish they had been available to me when I first started."

"Taking risks is what microenterprise is all about,"says Deborah Wagner, BusinesStart's loan servicing officer. "If they've got that fire in their gut, they can open up a little shop and make something of themselves."

Carl Hoffman is a freelance writer based in Washington, D.C.