The state of California is introducing a new loan program that will provide micro-loans of $500 to $10,000 to entrepreneurs and nonprofit founders whose organizations could bring jobs to the poorest neighborhoods.
“These low-wealth entrepreneurs simply do not have access to financing that other communities have,” said Teveia Barnes, executive director of the California Infrastructure and Economic Development Bank, known as IBank. “We specifically targeted the...program to low-wealth individuals who are in low-wealth communities to try to reinvigorate these communities and to basically help these entrepreneurs get a jumpstart on their business.”
The initiative is, in fact, called the Jump Start Loan Program, and IBank will be making $1 million available for lending, $500,000 of it in this first year. The agency’s board decided to use funds from IBank’s farm lending program to get Jump Start off the ground.
IBank has asked longtime partners at five financial development corporations around the state to handle underwriting for the loans. California Capital FDC is handling the work in the Sacramento region, and other partners are Nor-Cal FDC in the Bay Area, California Coastal Rural Development Corp. in Salinas, Valley Small Business Development Corp. in Fresno, and Pacific Coast Regional in the Los Angeles area.
No loans have been made yet, Barnes said, explaining that “the FDC’s are in the process of doing the training and providing the technical assistance to prospective....It’s really important that they understand how to do a business plan, for example, before we give them these funds. We want to be sure they understand the significance of the loan, the importance of paying it back, so the program can be sustainable to help other small businesses.”
These loans, which have a five-year term, can be used for start-up costs, property purchases, leases, machinery, equipment, inventory or tenant improvements.