Community Banks Help Families, Entrepreneurs and Non-Profits
Mr. Michael Mazepink,
Member of the Board,
Community Capital of Maryland
People's Homesteading Group
Community Development Financial Institutions
Been turned down for a loan to start a business or buy a house? Want money to expand your business or fix up your house? The government supports certain banks and credit unions who help people who have trouble getting loans elsewhere, so they can make their dreams come true. These banks have special programs to helpthose in need. The banks work with people who have poor credit histories or little savings. They can provide you with the loans you need, as well as teach you how to manage the money.
It is often the case for those who live in poor communities that finding funding to buy a house or start a business is impossible. Banks and other financial institutions are not willing to take the risks necessary to lend money in poorer neighborhoods. Individuals who live in these neighborhoods do not have a relationship with a traditional bank or depend on the services of places such as pawnshops, check cashers and payday lenders. Many of these individuals live in neighborhoods where no bank branches are found, or cannot buy a home or start a business because they lack the credit history or collateral needed. Some people become victims of predatory mortgage lenders, whose excessive interest rates, fees and prepayment penalties may lead to foreclosure and loss of the home.
Not only individuals and businesses suffer from the lack of financial services and financing, but community service suffers as well. Nonprofit developers have limited alternatives for financing new affordable housing units. Low-income communities in great need of childcare centers, hospitals, or charter schools find these services in short supply. Capital needed to revitalize these areas is difficult to obtain.
The U.S. Department of Treasury's Community Development Financial Institutions (CDFI) Fund is designed to award money to banks in support of their activities benefiting needy communities across the country. These banks provide a range of financial products and services including: mortgage financing for first-time-home-buyers, financing for needed community facilities, commercial loans and investments to start or expand small businesses, loans to rehabilitate rental housing and financial services needed by low-income households and local businesses. CDFIs include community development banks, credit unions, loan funds, venture capital funds, and microenterprise loan funds.
To help keep their investments safe, CDFIs provide technical assistance and training to their borrowers. Through credit counseling, business training and first-time homebuyer training, individuals learn how to manage debt and how to recognize predatory lending practices; entrepreneurs learn how to grow their businesses responsibly; and first-time homebuyers learn the importance of budgeting and home-repair to maintain the value of their homes.
The following examples are excerpted from the websites of the U.S. Department of Treasury's Community Development Financial Institutions Fund (CDFI) and lending institutions listed in this chapter. Contact CDFI and lenders in your area for more information on how they can help you.
Do you dream of starting a business, but don't have the start-up funds you need to stock the shelves? North, South, East, West - there is money all over the USA to help people just like you. In this case, the funds are available through local banks, and granted to individuals, businesses and organizations. The money is available through the U.S. Department of Treasury's Community Development Financial Institutions (CDFI) Fund.
The CDFI Fund does not make loans directly to individuals. Instead, it directs funds to local banks, as they know their community best. The banks receive enough funds to make a number of loans available to their community.
- In the Snow Belt, the University Bank of St. Paul, Minnesota received an award of $795,969.
- In rural Mississippi, the Delta Southern Bank of Ruleville received an award of $401,521.
- On the East Coast, the Harbor Bank in Baltimore, Maryland, received $663,818.
- And, out West, the Northern Trust Bank in Phoenix, Arizona, received $354,506.
Once the banks receive the funds, they can use the money to assist individuals who want to start their own businesses, and can also help owners of existing businesses. When banks help businesses grow, this means more jobs and stability for the community.
If the bank in your area is a certified community development financial institution, that means they receive funds from the federal government that are earmarked to help people like you. If you are thinking about starting a business and need a loan to get the office up and running, if your firm is ready to grow and you need a boost of capital, or if you need help with the nuts and bolts of operating your business, contact a community development financial institution. That is what individuals from every corner of the country have done and below are their success stories.
A Support Team for Financial and Technical Help
In 1991, Margaret Quenemoen was living in her car. As a last ditch effort to make ends meet, she began making and selling headbands for skiers and the headbands sold like hot cakes. She now sells thousands of vests, jackets and other outerwear throughout the country, earning millions of dollars in sales every year. Quenemoen credits her leap to success with the help she received from her local CDFI, the Utah Microenterprise Loan Fund (UMLF.
Quenemoen had been turned down for bank loans, but the UMLF recognized her drive to succeed and awarded her a $10,000 loan. They also helped her with technical assistance, so she could make the best decisions for her business. "The information was new to me," she explained. "The UMLF helped get me through the processes needed to comply with the regulations. The people there were my support team!"
Springboard to Success
When Digital Equipment Corporation shut their doors, one of their employees saw an opportunity to open doors of his own. Tony Dolphin proposed to buy out the division that repaired hard drives, and go into business for himself. Dolphin knew that he would have to grow to stay competitive, so he secured funding from the Boston Community Ventures Fund. More than ten years later, his firm Springboard Technologies - provides services to large computer manufacturers, and also offers a jumpstart for local students through community college training programs.
Pick the Outcome to Your Story
Imagine going to the office in your own garage! That is where Joe and Bambi Serna once operated their Colorado-based print brokering service. Along the way, they learned enough about the printing business to open their own plant, but needed funds to help them expand. Their local CDFI, the Colorado Enterprise Fund, helped them meet their goals.
According to Joe Serna, "Small companies don't always need millions to get started. Sometimes a few thousand is all you need to get the ball rolling."
Joe says he owns a business because he wants the opportunity to make his own destination. "By owning your own business, you pick the outcome to your story."
A River of Dreams
We all have dreams. For Don Hasch, it was to turn his love for canoeing and recreational activities into a business. When the owner of a local canoe rental company retired, Don saw his chance. Like so many would-be entrepreneurs in rural areas, however, he could not raise the capital he needed. He approached a Pennsylvania-based CDFI called The Progress Fund, and secured a loan that made his dream a reality. Now he is the owner of Hazelbaker's Recreational Services, which offers canoe, kayak and fishing trips - and for those who prefer their recreation on dry land, Don rents out bikes and provides space for picnics.
Cooking Up Good Business
Sha-Dee's Kountry Kettle is known as having the best food in Salisbury, Maryland. Before Shelvia and Delores Donohue opened the restaurant, they had 40 years of restaurant experience between them, so they knew how to make a delicious meal. But, a restaurant needs to offer more than what's on the menu. so with a loan from Maryland Capitol Enterprises, they were also able to enhance operations and help their business grow.
When A Traditional Bank Won't Help
Charles Leseman and Philip Mahler met in a hardware store and decided to go into the contracting business. They came upon a project that was good business, and also helped their community. They planned to develop a hotel into apartments, and to partner with a social service agency that worked with homeless individuals who needed efficiency units. Finding funding through traditional banks for the project was difficult. When Leseman and Mahler contacted their local CDFI the Community Capital Bank of New York City they secured the money required.
Compared to other institutions, Community Capitol Bank is the best I've ever worked with, Leseman says. "You never felt like you were small when you were dealing with them."
To Find A Community Financial Institution Near You Contact:
Community Development Financial Institutions Fund
601 13th St., NW, Suite 200
Washington, DC 20005