82.1 F
San Fernando
Friday, Aug 12, 2022
-Advertisement-

VEDC Expands Reach Statewide

Fueled by a $5 million grant by J.P. Morgan Chase, The Valley Economic Development Center is expanding its reach, and for the first time will begin lending to companies statewide. This expansion will require the VEDC to open an office in the Bay area and hire additional staff, and could mark a turning point for the non-profit organization. “The impact of this grant is profound on our organization, it fundamentally changes the scope of what we do,” said VEDC Board Chair Don St. Clair. “We are now likely to be the largest lender of this kind in the state of California, and if we are a major player in California, it functionally gives us a prominent national leadership role in the not-for-profit business development circles.” The grant, which would establish the Chase Small Business California Loan Program, would enable the VEDC to make direct loans primarily to businesses in low to moderate income communities, and to businesses hiring low to moderate income individuals. VEDC President Roberto Barragan said the organization plans to leverage the $5 million grant up to ten times to generate $50 million in loan capital, which could directly benefit up to 200 businesses over the next three years and create at least 2,000 jobs. “The small business loan market is still very tight. If we are able to leverage this into $50 million in loan capital to be provided to small businesses to support their growth plans into the future, it’s going to have a significant impact on those businesses, and a significant impact on the economies of those places where those businesses exist,” St. Clair said. “We feel we have a real opportunity to do some good work to help pull this state out of the recession by helping small businesses grow.” Up until now, the organization has largely remained regional lending to businesses in the greater Los Angeles area, in Orange and Ventura Counties, and the Inland Empire through ten different lending programs. “Now for the first time we are able to lend statewide,” said Barragan, adding that demand for VEDC’s services has grown in the past two years in lieu of the credit crunch. “We’ve received many, many calls from businesses around the state interested in getting loans, but up until now we have not had the loan capital to do so.” The new Chase grant was awarded with the stipulation that VEDC use the funds to lend to businesses statewide. New office In order to accomplish this, VEDC will open a new location in the Bay area, which represents a large and important market for small businesses in the state consisting of approximately 200,000 small businesses between San Francisco, Oakland and San Jose, according to Barragan. “It’s part of our commitment to Chase and the only way to properly service the Bay area is to have a center there,” he said. Barragan, who has spent 16 years at VEDC (11 of those as president) said he knows the Bay area market well. Before joining VEDC, Barragan spent eight years working for non-profit organizations there. VEDC has also conducted three of its signature access to capital expos called ‘Where’s the Money’ in San Francisco. The last expo, sponsored by Wells Fargo, took place there last November. The Chase grant will also likely bring additional hires at VEDC. Barragan said they expect to add between four and eight new staff members over the next three years. Gary Kishner, a spokesperson for Chase said the $5 million grant to VEDC is part of a larger, nationwide initiative to award $100 million in grants to select Community Development Financial Institutions or CDFIs. “These CDFIs have been carefully selected, they have a successful track record in lending and an effective wide reach in terms of the businesses and the communities that they impact,” he said. The grant is the culmination of more than a year of developing a strong relationship with Chase, said Barragan, adding that VEDC and Chase partnered to provide access to capital workshops in four Los Angeles neighborhoods last year. Already Chase ranks among the nation’s top small business lenders. In 2010 Chase increased small business lending by nearly 40 percent to more than $10 billion in 2010 and recently earned the No. 1 ranking among SBA lenders nationwide, Kishner said. In Los Angeles, Chase ranks in the No. 2 spot among SBA lenders. However, by partnering with organizations like VEDC, big banks like Chase can lend to small businesses that they would not traditionally lend to, and have an impact outside of their typical markets, said Barragan. These types of grants often fit well with a financial institution’s corporate giving strategies which also serve to boost goodwill among consumers. Long-term strategy Partnerships such as the one established with Chase, reflect the VEDC’s long term strategy for continued growth in support of its mission to boost economic development, said Barragan. “We are looking at not only successfully implementing the Chase program, but we are continuing to look for other partners and other funders, I don’t think the Chase loan program will be the last new program we have,” he said. To advance this strategy, Barragan said as of Jan. 24 the VEDC created a new position specifically tasked with building and developing relationships with banks such as Chase. The position of Director of Strategic Partnership will be occupied by Cynthia Ibarra, formerly VEDC’s director of business services. In the last decade VEDC, which got its start in 1976, has transitioned from being primarily a training and educational agency focused on holding workshops and educational programs, into becoming an organization very much focused on lending capital and making loans, and it has increasingly relied on partnerships with financial institutions. Several of VEDC’s projects have been funded with the support of Wachovia, and more recently Wells Fargo. Last year VEDC was a beneficiary of a $5 million grant by Goldman Sachs, which enabled it to expand its lending program in the Los Angeles metropolitan region. The Goldman Sachs initiative “10,000 Small Businesses” partnered with Los Angeles City College and the Long Beach Community College District to offer free business management education to small-business owners. US Bank also awarded $2 million to the VEDC for small business loans in Orange County and the Inland Empire. Those grants served to complement VEDC’s citywide small business lending program, which was launched with $15 million from the Los Angeles Community Development Department in 2008. Local support The Chase grant also allocates a small amount of capital and staffing to help VEDC create a credit union support organization sometime before the end of the first quarter. According to Barragan, the Pacoima Credit Union, which was started by the VEDC, has put in place a successful SBA 7(a) lending program for small businesses, which could be replicated by other credit unions as a financially viable strategy.

-Advertisement-

Featured Articles

-Advertisement-
-Advertisement-

Related Articles

-Advertisement-
-Advertisement-