|
 Back in early 2007, Zia Thea Xiong turned to the Fresno County Economic Opportunities Commission for a lifeline -- a $20,000, no-interest loan that allowed him to stay in business after a Valley-wide freeze devastated his vegetable crops.
"I had to pay my workers," Xiong, a 47-year-old former refugee from Laos, said as he led a recent tour of his revitalized and newly expanded 77-acre farm east of Fresno.
Like many farmers who turned to the emergency freeze loans backed by the city of Fresno and handled by the EOC, Xiong said he wouldn't have been able to wait the months it would have taken to secure a loan from a bank or other lender.
But at least Xiong, who went to a bank in 2003 for the $50,000 loan that helped him get his farm started, had a traditional loan as an option.
Many of his fellow Southeast Asian refugees lack bank accounts or collateral that are bare-minimum requirements for borrowing startup capital from banks and other traditional lending sources, said Salam Nalia, associate executive director of the EOC.
Since the mid-1990s, the EOC's microloan program has served to bridge that requirement gap. Started to help refugees, the lending program -- more akin to microloan networks set up in Third World countries than the traditional lending used by most Americans -- has expanded to serve more than 300 clients getting an average loan of about $7,000 out of a revolving pool of about $2 million, Nalia said.
But with the formation of the Fresno Community Development Financial Institution, a new private lending fund aimed at helping economically disadvantaged people enter the economic mainstream, the EOC soon will be able to boost that lending significantly, he said.
"Its purpose is for low-income people to build or accumulate assets," said Nalia, who is chief executive of the new CDFI. The goal is the same that the EOC's microloan program has had all along, but with some important added benefits, he said.
First, he's hoping the CDFI will bring a new pool of money to the EOC's coffers, in the form of a $1 million grant from the U.S. Treasury Department that his organization is seeking. Given that the EOC's current pool of $2 million is almost completely loaned out, that would help expand the number of clients the organization could help.
Second, the CDFI would be able to loan significantly larger amounts of money to borrowers planning more capital-intensive projects, such as construction of shopping centers or affordable housing projects in lower-income neighborhoods, Nalia said.
Both changes could help those who have been turned away from the EOC for lack of funds or loan limitations, said Maishing Xiong, business plan specialist for the commission. So far this year, 68 people have expressed interest in getting a loan, but the EOC has been able to make only about 36 loans, she said.
Lafield Phetvixay, program assistant with the EOC, said the 32 who were turned away likely won't get their businesses off the ground -- because many face nearly impassable obstacles to getting a bank loan.
Traditional lenders "ask for bank statements, but many of these people have never had a bank statement in their lives," he said. "They may not have any experience working in this country, and they often have no credit or credit score."
In fact, most of the commission's clients operate on a cash basis, said Phetvixay, whose job includes making trips out to clients' homes, farms and places of business to collect monthly loan payments. Most EOC loans charge interest a few points above prime rates -- about 7% so far this year -- though the one-time-only freeze relief loans from the city of Fresno in 2007 were interest-free, he said.
About two-thirds of the EOC current borrowers are farmers like Xiong, Phetvixay said. But they also include other businesses such as auto mechanics or retail store operators.
Abdelhamed Ali, who moved to Fresno from Yemen, took out a $15,000 microloan in 2005 to open his first tobacco and general convenience store in southeast Fresno. With that store making enough money to pay back the loan, Ali took out another $15,000 loan to open a second store earlier this year.
"This was my first stop," he said of the EOC.
Nalia said that's common among the borrowers who come to the EOC for help. His staff works closely with borrowers who lack credit scores and other more traditional measurements of their creditworthiness to determine whether they're a good risk.
"As long as he or she is employing people and has a good business plan, we're willing to talk," he said.
With a default rate of less than 1% on the loans the EOC has made since 1994, Nalia also expects that banks will be willing to talk with clients of the new CDFI program -- particularly since most banks are seeking to make sound loans in lower-income communities to meet federal lending guidelines.
"There are billions in CRA funds that we want to access and bring into this area," Nalia said.
The reporter can be reached at
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
or (559) 441-6637.
Here's some more information about the Fresno County EOC loan programs:
Started: 1994
Total number of loans: 310
Average loan: $7,055
Total loaned out: $2,187,000
Published in the Fresno Bee: New private fund in Fresno can offer additional capital.
Jeff St. John
9/3/08 |
