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Small Business

Need a Microloan? North Alabama Revolving Loan Fund Making Startup Dreams Come True

Huntsville resident Teri Hartmann, owner of designbyhart at Lowe Mill ARTS & Entertainment in Huntsville, will receive a $25,000 loan from the North Alabama Revolving Loan Fund by Neighborhood Concepts on Friday, Jan. 9, 2014. (designbyhart)

HUNTSVILLE, Alabama – Huntsville resident Teri Hartmann first heard about the North Alabama Revolving Loan Fund last year through Rocket Hatch’s COSTARTERS program for aspiring entrepreneurs.

Hartmann needed capital to help jumpstart her small business, designbyhart, but she didn’t have access to traditional financing sources.

Neighborhood Concepts (NCI), which provides microloans as little as $2,500 to as much as $50,000 to north Alabama startups and small businesses, agreed to offer Hartmann a $25,000 loan to nurture her new pottery studio, classroom and gallery space at Lowe Mill ARTS & Entertainment.

NCI and designbyhart will close on the loan Friday. Hartmann, who teaches about 25 pottery students from her Lowe Mill studio, said the startup capital “means everything.”

“This is just a dream I’ve had the past eight years,” she said. “I’ve been working toward this moment and for them to be able to provide this loan for me means that my business is going to get off on the right foot. It’s not going to struggle from the beginning.”

Strengthening neighborhoods

NCI Executive Director Mary Ellen Judah said designbyhart was a good investment for the North Alabama Revolving Loan Fund because the neighborhood surrounding Lowe Mill is going through a “Renaissance.”

She said NCI’s mission is to “strengthen neighborhoods through the provision of affordable housing and fostering of economic opportunities.” To make loans in NCI’s 11-county footprint, the organization launched the North Alabama Revolving Loan Fund in late 2012 using $300,000 in seed money from the Food Bank of North Alabama.

A year later, the city of Huntsville’s Community Development Department committed $250,000 to the fund, bringing NCI’s lending capital to more than $500,000. Since the organization began loaning money in 2013, they have supported 10 small businesses with loans totaling about $197,000.

Judah said the loans have more flexibility than most traditional regulated financial institutions.

“We can lend to startups and can structure payment terms to best suit the needs of our borrower,” she said.

Helping prepare borrowers

NCI also provides business development resources to its clients. For example, NCI has a certified QuickBooks specialist on staff who works with borrowers to create invoices, track expenses and manage their accounts.

Judah said they’re not trying to replace or compete with traditional banks.

“We are trying to prepare these borrowers so, as they grow, they’re ready to transition into traditional finance,” she said.

Laura Hester, owner of Red Gingham Gourmet in Florence, borrowed money from the loan fund to help purchase a piece of equipment for her cornbread business. Her frozen cornbread muffins are now available at grocery stores and Wal-Marts in northwest Alabama.

A Cup of Everything in downtown Huntsville took advantage of the fund to help with the cost of buildout, equipment and inventory. Food Fighter Bustaurant owner Jason Lafferty borrowed money for his mobile food business, while Charlie Horton used less than $25,000 on a piece of equipment for G3 Machining in Huntsville.

Judah said loan recipients should either support a local healthy food economy, create or retain jobs for low-to-moderate income residents or provide needed services in under-served neighborhoods. They’re also interested in minority- and women-owned enterprises, as well as low-income business owners.

Pilot programs

Judah said NCI would like to roll out about $350,000 in loans by the end of this year. They also want to expand their reach in north Alabama and start a campaign to raise additional capital. One idea is to contact Huntsville residents interested in “social investment.”

“Another pilot program would include local banks where they can make an investment in the fund and then be able to make an impact in their community while also mitigating their risk,” she said.

In November, NCI submitted a grant application to the U.S. Treasury’s Community Development Financial Institution (CDFI) Fund for technical assistance to increase the loan fund’s capacity. They expect to hear back on the application this fall.

They will also submit a request to the Fund this year for CDFI certification, which would allow NCI to access the New Markets Tax Credit Program and increase its overall capital.

“I think it’s a really exciting time to be in Huntsville,” Judah said. “For so long, we’ve been known as a defense industry, a high-tech industry. There is a real interest now – an organic movement – to try and grow small businesses.”

January 8, 2015

Lucy Berry | By Lucy Berry |

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