RALEIGH, N. C. (8/14/12)--In North Carolina, nonprofit organizations associated with not-for-profit credit unions bridge the gap when small businesses need funds and can't get credit through traditional routes.
For example, Jackie Green, who started a Raleigh-area bakery in her home in 2009 could not find the capital to upgrade the cooking equipment in her kitchen, according to The News & Observer (Aug. 12). Green was told she needed $30,000 worth of collateral and A-plus credit.
Green ended up at The Support Center, a community development financial institution (CDFI) that operates through Generations Community CU in Durham. It offers loan programs to businesses that can't access capital through traditional means. Green received a $40,000 loan from the program. Two years later, she received a second $160,000 loan through its small business lending program, which financed the opening of her store in Apex. She expects to hire several employees to meet a growing demand.
Durham-based Self-Help is a nonprofit that works with Self-Help CU. Self-Help refers clients needing microloans--loans for $50,000 or under-- to The Support Group when they don't fit the credit union's lending profile.
Banks have significantly tightened their credit parameters and are willing to lend to only very well-qualified borrowers, the article noted, adding that microloans are particularly problematic.
Although CDFIs can take more risk than traditional lenders, Self-Help says it does not rubber stamp loans for just anyone. But the CDFI will "dig deeper and listen to the [applicant's] story."
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