Micro-loan source for New Brunswick NJ small business owners
Accion USA, a nonprofit lender specializing in loans to small businesses, has opened an office inside Unity Square’s offices in New Jersey, which administers a range of housing, economic development, and social services programs.
“When we started organizing the neighborhood and meeting with the neighborhood residents, it became very, very clear that many of them are aspiring entrepreneurs,” said Marlene Sigman, director of Unity Square, which administers a range of housing, economic development, and social services programs.
“On the other hand, there were a lot that didn’t know anything about the credit situation and how to get loans, how to start businesses, and how to even open a banking account.”
The recent economic recession only worsened the problem, as banks began tightening their lending practices.
Now, would-be entrepreneurs in the city have a new place to turn for start-up money and business capital.
Accion was hired by the city’s Urban Enterprise Zone (UEZ) last year to provide micro-loans to city residents and businesses. Under the contract, they will administer $84,000 in loans over the course of a year. Accion’s office will be open on Tuesday and Fridays.
Laine Rolong, director of business development for Accion USA, said her agency looks beyond credit scores, and is willing to give small loans to those without any credit history at all. Loans range in size from $500 to $50,000, and come in three categories: personal, start-up business, and established business loans.
“Micro-loans not only keep businesses open, but they keep them out of the grasp of predatory lenders and loan sharks,” she said.
The agency works with its borrowers through seminars, “webinars” and consultations to educate them about the American banking and finance system. Rolong said that work results in successful repayment rates and successful businesses.
“Accion USA reports to the three credit agencies so borrowers can increase their credit scores to position entrepreneurs and individuals to be strong candidates when they can borrow money from the banks,” she said.
Mayor Jim Cahill noted that the group’s average loan is about $7,000, meaning the contract should help roughly a dozen businesses in the city.
“Picture 12 more businesses moving in or moving to another level and then in the next year (if) we can have the state keep its hands off our Urban Enterprise Zone monies for future allocations, it’s a program that can grow,” he said.
Under the contract between Accion and the city’s UEZ, Accion assumes the risk for the loans, and the city will pay Accion $51,480 dollars in operating expenses for the year. Unity Square is donating the office space.
According to its Web site, Perth Amboy’s UEZ also offers a revolving loan program, which is in its seventh year and grants low-interest loans and fixed-rate financing to businesses unable to obtain credit from traditional lenders.
Lorena Gailbor, a program director at Unity Square, said a lot of small business owners in the city operate clandestinely out of their homes, and she hopes programs like Accion’s micro-loans will help those businesses become legitimate and legal.
“A lot of our folks within the Mexican community have home food businesses, and a lot of the women make things at home and sell them on the street,” she said. “It’s illegal, but they do it. They have to. So we want to help legitimize them to take them out of the shadows, get them out of their homes and hopefully hook them up with a kitchen where they can get certified and help promote their businesses.”
The loans are available to anyone operating or starting a business within the city’s Urban Enterprise Zone, or to any city resident operating a home-based business. The zone includes the downtown, as well as shopping areas on Jersey Avenue and Route 1. The personal loans are open to any city resident.
To reach Accion’s loan officer in New Brunswick, call 201-424-9601.
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Source: http://www.mycentraljersey.com/article/20100221/BUSINESS/100221006/-1/newsfront/Small-businesses-in-New-Brunswick-have-new-place-to-seek-micro-loans
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