September 1, 2021 1251 PM
TEXAS – A new million dollar loan program is open to Texas business owners through Communities Unlimited, a nonprofit that works to expand access to opportunities for underserved, minority and rural communities. The Open for Business Fund, backed by Wells Fargo, promises to commit 70% of that funding to Hispanic and Black-owned businesses, as well as female-owned businesses in rural areas.
The nonprofit has one year to distribute the loans across the seven states it serves, and individual loans run as large as $100,000 per business. CU has already begun distributing funds right here in Marfa, giving financing to the town’s new meat processing facility, Marfa Meats. “She was our first one,” said Bryn Bagwell, CU’s director of lending. “We got the funding, put it in the bank and the next week said, ‘Oh, this is a good use for the money.’”
Communities Unlimited has worked with West Texas in the past, when the nonprofit provided support for a comprehensive planning grant among Marfa, Presidio and Presidio County that addressed emergency services, housing and economic development. Now, they’re looking at the town again.
“Marfa is one of the coolest places; it’s just a unique place,” Bagwell said. “It’s ideal for us. It’s people in a rural area but they also have an independent streak to get to Marfa and find their passion there. It’s something we have really enjoyed finding when we get to know somebody that’s looking for loan funds there.”
The focus of the Open for Business Fund is to connect loans with racially and ethnically diverse and rural entrepreneurs who may have difficulty accessing capital through the traditional banking community. Any for-profit business can apply, regardless of the industry. They even back startup businesses, which can struggle to find traditional financing.
The whole purpose, Bagwell said, is that in a couple years, the business should become more attractive for local bank loans as they become strong depositors at the bank and become a pillar of the community.
“The idea is to get it to those who, maybe they got part of their funding. Marfa Meats had some of what she needed to contribute, and we came in to provide that hard-to-get capital,” Bagwell explained.
“It is incredibly hard to start a business, especially from scratch,” said Christy Miller, the owner of Marfa Meats. “What has made it so incredible is the community. People who live here care about businesses that provide services here.” She describes Marfa Meats’ purpose as “two-fold to provide access to locally raised meats, facilitating the growth of other small businesses.”
While traditional banks often want a loan to be “fully collateralized” – backed by assets that match the value of the loan – this loan doesn’t need that. Wells Fargo also bought down the interest rate on the loans, so borrowers will see only 3% instead of the more typical 6% interest.
“We won’t use it to compete against a local bank; if they’re approved elsewhere we won’t come in and compete,” Bagwell said. “Our purpose is for those who don’t have that opportunity.”
The application process involves sending a business plan with financial projections to CU. Though the process also involves a look at credit history, CU actually does not have a minimum credit score requirement, offering leeway to those with damaged credit if they can credibly explain what caused it.
“The other thing we’re also very serious about is providing management consulting services,” Bagwell said. CU offers business owners free access to its technical assistance group during the loan period.
The Open for Business Fund includes nearly $420 million in small business recovery funds across the United States to help entrepreneurs during COVID-19, and the million dollars that’s available through Communities Unlimited is still largely untapped.
“We just started this, so we’ve still got another $900,000 to get out,” Bagwell said. “We’re definitely trying to find more qualified recipients.” Visit communitiesu.org to learn more or apply for the Open for Business Fund through CU.