A new crop of microlenders can help businesses when larger banks can't
After opening a Smoothie King franchise in a Crowder Boulevard shopping center, Rey and her business partner, Russell Thomas, opened Finales Fitness in January 2009.
They quickly realized that they needed an aerobics room, free-weight areas and more treadmills and elliptical trainers, so they went to their bank, Capital One, to see about a loan. But because Finales Fitness had been in business for only a few months, they didn't qualify. At Capital One's suggestion, Rey and Thomas found their way to a nonprofit that loans money to even the smallest and newest of businesses: Accion Texas-Louisiana.
"They worked with us on the loan," Rey said of Accion, which enabled Finales Fitness to expand in May 2009 with a $40,000 loan. "We're the only gym thus far in the New Orleans east area. We wanted to be part of the rebuilding process."
Accion, the nation's largest micro-lender that started in Latin America in the 1960s, came to Louisiana in 2009 and makes loans from $500 to $100,000 to create new economic opportunities for aspiring entrepreneurs like Rey and Thomas.
"We specialize in small-business lending for the small entrepreneur who may not fit a bank's model," said Mel Robertson, vice president of Louisiana operations. "Our goal is to make those entrepreneurs bankable."
Accion is one of several new alternative financing organizations that have rolled out or expanded in the New Orleans area since Hurricane Katrina, with missions ranging from alleviating poverty to stabilizing and expanding the economy by providing financial support to small businesses. Groups like the Hope Credit Union, the ASI Federal Credit Union's A Shared Initiative Inc. nonprofit, Seedco Financial Services, and Citizens United for Economic Equity are all new since the storm, while longtime player Advantage Capital Partners was able to expand the reach of its BizCapital small business loan program by partnering with government-based recovery programs.
Michael Hecht, president and chief executive of the regional economic development group Greater New Orleans Inc., said that these efforts, coupled with new initiatives to support high-growth ventures, add up to a lot more financing options for small companies.
"As a community, we still have a ways to go to have adequate capital to serve the different sorts of businesses, but since Katrina, there's been a surge of activity that's been accelerating," Hecht said. "I think we're still thin up and down the chain. The good news is that we're filling in the gaps up and down the capital ladder. I don't think there are any rungs that are missing anymore in the capital ladder, but compared to other communities, we don't have significant depth at each of these rungs. We need to continue to build out the robustness of this capital chain that we're building.
Bank Credit To Small Scale Enterprises - News
Loans to small and medium enterprises jumped 35 percent, according to a company statement. While second-quarter revenue from its consumer bank's Latin American and Asian units rose a combined 13 percent to $4.46 billion, profit fell 14 percent.
The result is a panoply of small-scale lenders with different niches. The Jackson, Miss.-based Hope Credit Union opened in Central City in December 2004. Although it had always made what it calls small-dollar loans to businesses, after Katrina the need
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By Correspondent More than 3000 small scale entrepreneurs engaged in informal sectors have benefited from micro credit facilities offered by Mkombozi Commercial Bank. MCB's Executive Director Edwina Lupembe would not give the amount of funds dished out
Bank Credit To Small Scale Enterprises - Bookshelf
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