Michael Jones had already endured a rejection from his longtime bank when First State Community Loan Fund (CLF) came to his rescue. The nonprofit lending institution approved a $50,000 micro loan for the Magnolia resident so he could purchase a dump truck and jumpstart his asphalt business.
When Andrea Sikora and her husband Bryan applied for a traditional loan to outfit a space for their new restaurant in Wilmington’s LOMA district, they were also turned down. The bank suggested First State CLF, and they were able to secure a $210,000 business growth loan for their eatery.
They opened popular La Fia restaurant and bakery in 2013.
“We specialize in working with clients who don’t meet traditional loan requirements,” said First State CLF President and CEO Vandell Hampton, Jr. “There’s a huge demand for our services.”
First State CLF, one of three Community Development Financial Institutions in the state, is coming off of its biggest year ever. In 2015, it approved more than 40 loans worth $3 million and generated more than 430 jobs, according to Hampton.
Not bad for a nonprofit forced to swap its focus from affordable housing to small-business lending after the recession. It was a win-win, as hopeful business owners like Jones and the Sikoras, either bruised by debt or lacking collateral, were able to find the generative funds they required to build their dream.
“They give people the opportunity to start a business, people who have something to offer but not resources to do it,” said Sikora, who will open a second Market Street restaurant this winter, thanks to another loan from First State. “It’s very important that people who have skills and qualifications have opportunity to borrow.”
The organization was just named one of the top 25 Community Advantage lenders in the country, a program of the U.S. Small Business Administration that was designed to meet the credit, management and technical assistance needs of small businesses in underserved markets.
“Part of helping them switch gears was perfect timing for when SBA introduced program called Community Advantage,” said John Fleming, director of the Delaware office of the SBA. “It really allowed organizations like First State to become SBA lenders in a normal banking 7A program.”
First State CLF offers two lending options through its Small Business Lending Program, which includes a micro loan fund, and business growth fund, and its Community Development Fund, which meets the needs of mixed use, community facilities, nonprofits, child-care facilities and affordable housing.
With an average loan of $80,000 to $100,000, Hampton said 60 percent of the lending and technical assistance must go to underserved communities.
But if switching gears enlarged the scope of its lending capacity, growing its Technical Assistance Program has shored up the viability of the loans they make.
The program helps lenders navigate the application process. It also provides critical advice in business planning and follow-up services. Both the popular Retail Assistance Program and the Women’s Business Center are outgrowths of the program.
The Retail Assistance Program provides help ranging from recommendations about growth and improvements, assistance with lease negotiations and financial and market analyses for business owners.
The Women’s Business Center, an SBA resource partner, offers services to women entrepreneurs, including marketing analysis and business planning. Last year, it packaged more than $700,000 in financing for First State CLF.
“We don’t just make a loan, we’re fine-tuning projections, bookkeeping, accounting,” said Hampton. “That’s an integral part of our business model.
“We provide a host of services to women owned business — training classes; networking events; connect them with mentors in the industry; one-on-one consulting,” said Hampton.
If it weren’t for the technical assistance and a bit of handholding, Melanie Thomas-Price said she’s certain her early childhood development center would have gone under years ago.
The former teacher opened A Leap of Faith Child Development Center in 2002, certain she could parlay her years of education experience into a thriving daycare and education center.
“But it was a lot more complicated than I thought,” conceded Thomas-Price. “And I began to go under.”
She called First State Community Loan Fund. Its technical assistance program helped the educator craft a business plan, connected her with SCORE volunteers, and radically shifted her business blueprint.
“They didn’t feed me milk and cookies,” said Thomas-Price. “They said, ‘We’ve got some issues here.’ But they explained the issues and told me how they were going to help me.”
Last year, she purchased a 12,000-square-foot building on Fourth Street thanks to a $75,000 loan from First State and financing through M & T Bank.
“I went from 40 children to 140, six employees to 21,” said Price-Thomas, who credits First State with her growth as a business owner and entrepreneur.
An office in Wilmington as well as one in Georgetown and another at the Entrepreneur Center at Delaware State University, puts First State in contact with clients throughout Delaware.
“We’re doing so much now, half of what we do is downstate, and that wasn’t the case six or seven years ago,” said Hampton.
“Many times we are the only option and we’re having a huge impact,” he said. “We’re creating jobs for folks, ownership opportunities.”
This year, Hampton said the organization has $1 million worth of loans in the pipeline. Still, raising money for the nonprofit continues to be its biggest challenge.
“We focus on businesses that don’t qualify for conventional services,” said Hampton. “We’re giving these folks an opportunity to achieve their dreams, to build personal equity and net worth.”
Thomas-Price, who said she was close to being a small-business statistic, credits the organization with keeping her business safe and connecting her with the right resources.
“You don’t get that support everywhere,” said Thomas-Price, who said she’s developed a better sense of herself as an individual and entrepreneur.
“When you dig down deep we’re really doing something for the community,” said Hampton. “What would have happened to those businesses, to those ideas if we weren’t there to provide that support?”