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Sunday, 22 March 2015 21:14

Battle Creek nonprofit to offer microloans to small businesses up to $25K

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Bill Phillips Bill Phillips COURTESY PHOTO

Seeking to further its mission of stabilizing neighborhoods, a Battle Creek nonprofit organization launched a pilot microloan program to provide financing for small businesses.

Neighborhoods Inc. of Battle Creek (NIBC) offers microloans of up to $25,000 for three years for small businesses that serve their surrounding neighborhoods and that have the potential to grow and create jobs. Small business owners who earn a microloan can use the funding for equipment purchases, inventory and working capital.

After the harsh toll the Great Recession took on small neighborhood businesses, NIBC views the Micro-Enterprise Loan Fund as an extension of its role to support residential neighborhoods.

As a Community Development Financial Institute under the U.S. Department of Treasury, NIBC for years has had the ability to offer small business financing but until now opted not to use it, said President and CEO Bill Phillips.

NIBC in the past viewed residential neighborhoods and surrounding small business districts as separate and “not related. We don’t believe that any longer. We believe they are totally related and connected,” Phillips said.

“The last six or seven years has really brought a new focus for us on the things that we can and should be doing to increase the health of our neighborhoods and our community, and one of those activities that has emerged as a higher priority is to support small business creation,” he said. “It’s our belief that in supporting small business creation and their maintenance and health that we also will be supporting the residential neighborhoods.”

The microloan fund has a particular focus on people forming small businesses that are concentrated in central business districts adjoining low- and moderate-income neighborhoods.

NIBC for now supports the Micro-Enterprise Loan Fund through in-house funding that’s been redirected from residential lending and plans to pursue outside financial support. The organization plans to reach out to foundations and large employers in Battle Creek who want to support entrepreneurism, as well as seek out national groups that can provide funding at “nominal” rates.

The current funding level is enough to support four or five microloans at the maximum amount, Phillips said. NIBC will couple the microloans with business coaching for small business owners.

While many loan recipients will surely have limitations on their growth potential because of geography or the kind of product or service they offer, Phillips envisions that perhaps some may grow up and become much larger.

“We’d love to support and promote a business that really can demonstrate a growth strategy where – over a predictable period of time – they can add more jobs and those additional jobs fuel the neighborhood economy and the community’s economy,” Phillips said. “We certainly hope to find some entrepreneurs that have the vision and the ideas that can grow and not be limited as to what their upside potential is.”

In time, NIBC’s goal is to establish a track record and apply for funding from the U.S. Small Business Administration to expand lending.

“We want to grow it beyond the $25,000 limitation and that’s going to be a function of our track record and a function of our access to those programs that will allow us to increase the loan sizes,” Phillips said. “You have to be able to show that track record and we’re hoping this will get us started in the right direction.”

NIBC contracts with a third-party loan underwriter and is forming a lending committee to review loan applications locally.

Read 11756 times Last modified on Monday, 23 March 2015 10:06

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