Specializing in Loans to Small Businesses

New Mexico Business Journal, Oct, 2001 by Shawn Shepherd

ACCION and the Community Development Loan Fund go where commercial banks sometimes fear to tred--and get a 98 percent repayment rate.

IT TAKES A VILLAGE. THAT COULD CERtainly be the simple mission statement for two organizations that are making a difference in the lifecycle of small businesses in New Mexico. ACCION New Mexico and the New Mexico Community Development Loan Fund have both been providing an alternative lending source to small business for more than a decade, and the result is economic development across the state.

In New Mexico, where 96 percent of business is small business according to the Small Business Administration's, it makes good sense that both of these nonprofit organizations have found a niche in providing a rich resource to the vital sector. And it's not just microlending and specialized financing support, which both organizations are known for; both also provide myriad services in technical assistance, from training for skill development to mentoring relationships with other entrepreneurs and business leaders statewide.

"A small business is the backbone of the New Mexico economy and always will be," said Vangie Gabaldon, executive director of the NMCDLF "Small businesses have been important to this state. They've been here a long time and they're sustainable, and we have to do a better job of providing for them."

That focus on small business is shared at ACCION, where president and CEO Anne Haines Yatskowitz works to preserve the unique character small business brings to the state. "Small business is so important to community and economic development," she said. "It provides for economic opportunity and it's a source of vitality and hope for communities. Because of that we work to strengthen the capacity of small businesses to succeed.

"New Mexico has a proud history of mirocenterprise in the traditional artisans who have passed down their skills that have helped create the unique identity of New Mexico," Haines said. "Families for generations have created income and livelihoods for themselves through self-employment and initiative. We have been a state fueled by small business. But at the same time, we're a state with the highest poverty rate in the nation and unless we really nurture small businesses we're destined to see some of the same poverty statistics continue."

Both organizations have a legacy of making financing available for those who would have difficulty accessing traditional sources of business and enterprise capital. The NMCDLF, founded in 1989 by members of the New Mexico Conference of Churches with $50,000 in seed funding from a group of Catholic nuns, has more than $6.4 million in loans out this year, with another $2 million available to loan. ACCION New Mexico has been operating as an independent affiliate of ACCION International since 1994 and has served close to 800 businesses with 1,400 loans. The Albuquerque-based nonprofit has dispersed more than $3.4 million in loans.

For both organizations, providing financing is the backbone of their mission. "There is a certain number of people who have a difficult time accessing capital for a variety of reasons," said the NMCDLF's Gabaldon, "it may be credit issues, or no credit history at all, or entrepreneurs who have a risky startup business-these people just don't have any place to go because banks aren't willing to make those very risky loans and we don't want (small business owners) to go to those 30 percent loan sharks at the corner.

"We are an alternative for nonprofits and small businesses to find the resources they need to realize a dream or continue growing their business," she said, adding that a unique aspect of the NMCDLF's statewide program is its availability to nonprofit organizations. "Nonprofits have a particularly hard time getting support from financial institutions because there are assumptions that they can't pay back debt and that's not true. We provide loans to nonprofits because they are doing a lot to improve community development in the areas that they serve," she said, adding that, in addition to service, non-profits contribute to economic development. "Job creation is not only in the business sector it is in other areas of the economy and particularly present in the nonprofit community."

In addition to reaching out to non-profits, the NMCDL has a history of providing loans to the least-served communities in the state, with more than 60 percent of its loans made in non-urban settings. "Our priority is rural New Mexico and we have to do a lot of outreach and travel to those communities to make our programs immediately accessible to them," said Gabaldon. And ACCION's program has also expanded to a statewide base in the last year, according to Haines. "We have experienced a growing demand for loans because we have been very proactive in our community outreach and we have expanded geographically," she said, "we are now lending in Santa Fe, Taos, Grants, Zuni and Las Cruces and as our geographic area has expanded we're receiving an increase in referrals from traditional lenders."