When Judy Wicks retired from running her restaurant, the White Dog Café, she wanted to find a way to help young, under-resourced entrepreneurs develop their own businesses. She had an idea but wasn’t sure it would work.

Like many other retired baby boomers, she had money, knowledge and time to offer young entrepreneurs. “How can I connect these two potentials?” she recalls asking. And crucially, how could she do so in a way that did not just create transactions, but built relationships and a sense of “co-creating the economy and the community that we all want to live in”?

At a party of retired friends, Wicks asked if they would be willing to join her in putting together a few thousand dollars to lend to young entrepreneurs. Immediately a few signed on and, in 2015, the Circle of Aunts and Uncles (CAU) was started.

Based in Philadelphia, the CAU is now seven years old and includes 45 “aunts” and “uncles.” Together, they have loaned $358,000 to 26 local businesses, with some being repeated borrowers and others just receiving technical assistance. The organization’s loans go up to $15,000, though it offers up to $20,000 for repeated borrowers. Companies have to be in business for at least six months generating revenue, as the CAU doesn’t fund start-ups. The loans must be for a specific purpose and are for one to three years.

Wicks, 75, says banks are unwilling to lend money to small businesses who haven’t proven themselves. She, too, had to borrow from her family and friends to start her restaurant before she was able to secure loans from a bank. However, many entrepreneurs don’t have family and friends they can ask for loans. That’s the gap this group aims to fill.

“It’s a substitute for family and friends stage capital,” Wicks said. “That’s why we call it the Circle of Aunts and Uncles.”

In 2018, Thane Wright took over a café in Philadelphia. But after a year, he was sinking fast. He had recently moved back to Philadelphia, where he, his pregnant wife and his dog were living in a rented room. He had no capital of his own, and his financial partner had bailed on him.

“It was so bad,” Wright, the owner of the Bower Café, remembers. “I was so stressed out I caught psoriasis on my skin.”

Still, he didn’t think he could approach a bank for a loan: “Banks don’t want to work with you if you don’t have anything to show them that you are creating revenue,” Wright says.

When a friend introduced him to Wicks and the CAU in 2019 and he received a $10,000 loan which he used for marketing, it literally saved his business.

Immediately, he became connected to the CAU’s extensive network. Once an entrepreneur has been issued a loan, they are assigned to an Aunt or Uncle. Although the Aunts and Uncles don’t necessarily have in-depth business expertise, they become light-bearers pointing entrepreneurs in the right direction. Wright says his Aunt, Marsha Levell, has been “amazing,” connecting him to accountants and industry leaders.

“As an entrepreneur, you don’t always know what your needs are,” says Wright. “You know you’re failing in multiple areas, and then they can help you to figure out in which area to start on first to get you back on your feet.”

The Aunts and Uncles’ own journey was not all smooth sailing, either.

At first, Wicks thought she could simply collect checks from the retirees, deposit them in a bank and disperse them to qualified applicants. “I had no idea what I was doing,” she says. “If I had tried to do that myself, I would have gone nuts — having a mechanism for the loans repaid, all that bookkeeping and so on. I could never have done that.”

Now the group’s loan fund is housed and managed by The Enterprise Center, a Philadelphia-based community development financial institution (CDFI) which also provides the Circle with a part-time loan manager. “That’s a big part of our success, working with a CDFI,” says Wicks.

The CAU charges a 3% interest rate that goes back into the loan fund. So far, they have never had a borrower default on a loan, Wicks says.

Inja Coates, the loan manager for the CAU at the Enterprise Center, says the group evaluates deals differently than most lending institutions.

“It’s about the relationship the CAU forms with the borrowers,” Coates said. “There are no credit checks, fees, collateral requirements, etc, so the barrier to access the funds is pretty low.”

They require prospective borrowers to provide some financial statements but avoid asking for extensive documentation. “We’re basically making a bet on character and quality of the product,” Wicks says.

The Enterprise Center also informs the entrepreneurs of other funding resources, and free professional coaching or classes offered, among other areas.

During the coronavirus pandemic, the CAU issued grants of $1,500 to many of the businesses to help them stay afloat. A few declined, saying the funds should go to companies that more urgently needed the support. For Wright, receiving the grant helped his business survive.

Last year, he received another loan of $10,000 for opening a second location. This past April, the new Bower Café was launched on the ground floor of the newly opened Hospital of the University of Pennsylvania–Pavilion. Wright is also working with a developer to open a third café.

Wicks believes the CAU’s premise can be implemented in other communities. A CDFI partnership would smooth the way, but all they need is trustworthy mentors — as well as finding Aunts and Uncles who are willing to contribute.

“The Aunts and Uncles are all people that want to do something to create a more just and sustainable economy, but in normal life it’s hard to know how to do that,” Wicks says. Through the CAU, seniors can apply their values of economic justice and environmental sustainability while developing personal relationships with young entrepreneurs to build a new economy.

Jane Peppers, 76, has been a member of the group since it started and has known Wicks from the 1970s.

“Small businesses are integral to the life of America,” said Peppers, a 76-year-old retired not-for-profit executive. “I believe strongly and firmly in the people who are brave enough to tackle these problems. I find that very inspirational.”

Like her, Bernadine Hawes, has also known Wicks since the 1970s. An Aunt of five years and a 72-year-old retired economic development specialist, Hawes used to work at a high-end incubator of information technology and biotech companies. Now, she says, she hopes to “be in this group forever.”

“These small businesses are where the growth really is going to be for this country,” Hawes predicted. “Because their lens [is] about sustainability, not about profit necessarily. It’s about a circular economy and it’s about looking for opportunities that they’ve not had in the past.”

This story is part of our series, CDFI Futures, which explores the community development finance industry through the lenses of equity, public policy and inclusive community development. The series is generously supported by Partners for the Common Good. Sign up for PCG’s CapNexus newsletter at capnexus.org.