In an effort to find new ways to help struggling small and start-up businesses in the region, including El Dorado County, the Sierra Economic Development Corporation (SEDCorp) is working with Bank of America to tap unused federal funds. SEDCorp has announced it has received a $45,000 grant from Bank of America for use as loan loss reserves that will make it possible to access $300,000 in loan capital from the U.S. Small Business Administration.
SEDCorp plans to use the SBA funds to make as many as 12 loans to small businesses in the area between now and June.
“The SBA microlending funds, made accessible by Bank of America’s commitment to community lending, is a great opportunity for about a dozen local small businesses to get capital,” said SEDCorp CEO Brent Smith. “We know that the best of those entrepreneurs have their heads up and are looking for the possibility to expand their business, seize greater market share, upgrade equipment or move to a better location.”
“Helping strengthen small businesses and new start-up companies stimulates job creation and is critical to our nation’s economic recovery,” said Fred Buck, Greater Northern California market president at Bank of America. “That is why it is critical to think innovatively and pursue every resource possible that helps small businesses grow. Bank of America is directing private sector capital to unlock exponentially greater amounts of federal dollars for their businesses.
“This $45,000 grant to SEDCorp enables them to leverage six to seven times that amount to lend to small local businesses, which creates a ripple effect impacting job growth, spending and overall economic expansion.”
SEDCorp’s loan programs serve a nine-county area including El Dorado, Yolo and Sacramento counties, and all the counties going north from there to the Oregon border, but SEDCorp sees these new funds being especially useful in the greater Sacramento area.
“There are thousands of small businesses serving the nearly 2 million people living in the greater Sacramento area,” said SEDCorp loan supervisor Colleen Crowden, “but many of those small businesses do not have the revenues or have not been around long enough to obtain a conventional loan. We can’t necessarily serve them all, but we want to try to serve as many as possible.”
The loans to be made with the new SBA microlending funds can be up to $50,000 and can be used for a variety of purposes. Crowden added, “Though many banks cannot lend to new startup businesses, SEDCorp is here, in part, specifically to help startups. We’ve been making that kind of loan for more than a decade. With this help from Bank of America, our banner line now is ‘Lonely non-profit lender seeks meaningful relationship with entrepreneurs and small business owners.’”
SEDCorp was created in 1969. It is the only SBA-certified microlender in its nine-county service area. It also provides a variety of business training classes that can be viewed at sedcorp.biz.
Bank of America is the nation’s largest community development investor with more than $1 billion invested with 120 Community Development Financial Institutions in 37 states. Through those relationships, bank officials recognized the need to support regional and local nonprofit lenders with grants to fund loan loss reserves that are required by federal microloan programs — funds that have gone unused in the past due to CDFIs not having the required loan loss reserves that typically range from 10 to 15 percent of the amount of the federal funds. Bank of America’s new loan loss reserve grants may unlock as much as $100 million in low-cost, long-term capital for small business microloans nationwide throughout 2011.