This Just In...OCC's Districts Report on New Opportunities for Banks
John Farrell (617) 482-1643
The International Institute of St. Louis, an 85-year-old social service agency, operates an economic development program that helps refugees and immigrants build assets and establish businesses. The Business Links Program provides business planning and consulting assistance and now is forming a micro loan fund to finance new immigrant businesses. Since 1999, Business Links has helped more than 120 businesses generate more than $15 million of combined revenue and provide more than 190 jobs. The institute’s economic development initiative also includes an Individual Development Accounts (IDA) program that has helped more than 400 participants save to start a business, purchase a home, or further their education. Banks can make loans to business owners who receive assistance from Business Links, can make an investment in the institute’s micro loan fund, can provide deposit account services for the IDA program, can make business, mortgage, or student loans to IDA participants, and can provide grant funding to support the Institute’s programs. For more information, contact Betsy Slosar at (314) 773-9090, ext. 156 or email@example.com.
Southern Bancorp is a $500-million development bank holding company that works to transform rural economies by stimulating investments in people, jobs, businesses, and real property. Formed in 1986 with a mission to improve the future of rural Arkansas, Southern has expanded its reach into the Arkansas and Mississippi Delta — one of the nation’s most impoverished regions. Southern’s family of companies offers a full line of financial products and development services to residents, including bank credit, housing development, small business assistance, “nonbank” lending, work force training, asset building, and advocacy for the poor. Financial institutions can support the work of Southern Bancorp by making a deposit into one of its three FDIC-insured financial institutions. The Community Deposit account is a certificate of deposit that pays competitive market rates and may qualify for the CRA credits for the investing institution. Deposits are re-invested in rural communities in the form of development loans that help borrowers start or expand small businesses, purchase homes, and grow crops. As one of the few rural CDFI organizations, Southern uses deposits to fund development loans in distressed communities throughout the region. Direct investments into one of its three affiliated nonprofit organizations are also available. For more information, contact Ben Steinberg at (870) 816-1148 or visit www.southernbancorpinc.com.
Banks interested in participating with Houston area banks to make community development investments can contact one of the multi-bank community development (CDC) entities. Created and operated by bankers, they provide financing and expertise for community development lending, investment, and services activities. These include: affordable housing, financing for small businesses, area revitalization and stabilization, and support of other community services and facilities that primarily benefit low- and moderate-income families within the CRA assessment area of participating banks. Area multi-bank CDCs include:
Houston Small Business Development Corporation (HSBDC) at (713) 845-2400 or firstname.lastname@example.org; Third Coast CDC at (713) 503-5124 or email@example.com; and Texas Mezzanine Fund (TMF) at (214) 943-5900 x 101 or Jreid@tmfund.com. Other Texas cities with multi-bank CDC investment opportunities include Austin, Brownsville, Dallas, Fort Worth, Houston, McAllen, and San Antonio.
Many small businesses need fixed-asset financing for amounts less than the $120,000 minimum loan amount under SBA’s 504 Certified Development Company loan program. The city of Kansas City, Missouri created the Neighborhood Commercial Revolving Loan Fund (NCRLF) to provide fixed-rate loans for less than $150,000 to small businesses in low- and moderate-income neighborhoods needing revitalization. Banks participate in the NCRLF program by providing loans at market rates for terms of up to 10 years to small business borrowers for 50 percent of the purchase price or cost of improvements; NCRLF loans 40 percent of the cost or a maximum of $50,000 for 10 years at a fixed interest rate of 5 percent using a lien position subordinated to the bank’s lien position. For more information, contact Brian Standage of the Economic Development Loan Corporation at (816) 691-2108 or visit www.edckc.com/edcloan.
Nevada bankers are launching a new initiative to enhance the state’s nonprofit community development landscape. Nevada is in the midst of an economic boom that has created a need for well-managed nonprofits. While many mature organizations are stretched to capacity, newer organizations have insufficient access to development resources. The bankers have responded by creating the Community Development Capacity Building Initiative. In addition to seeding and cultivating organizations, the Initiative’s training and technical assistance will aid in providing accountability for future bank-funded grants and investments. Training will be provided statewide and tailored to meet the needs of new and mature organizations, with an emphasis on financial management and strategic planning. The bankers view the initiative as a win-win for the nonprofits and the banks — with Nevada residents as the biggest winners. For more information, contact Joselyn Cousins or Nancy Hamilton: Joselyn.Cousins@citigroup.com or Nancy.Hamilton@wellsfargo.com.