Martin Loan Fund helping small-business owners overcome major obstacle to success
After a series of BDB Pulse visits uncovered a shared concern among local small-business owners about the challenges entailed in accessing capital, the BDB went to work to fill the gap.
The result is the newly unveiled Martin Loan Fund.
In fact, its first recipient is Old Havana Café, a new restaurant that will celebrate its grand opening at noon on Saturday in Stuart.
To clarify how the fund works and explain what it does and doesn’t do, we spoke with Paul Skyers. A business development officer with nearly 25 years of experience in loan packaging, financial analysis, business financing, real estate and more, Paul is partnering with the BDB to help identify and serve local businesses.
Simply put, what is the Martin Loan Fund and how does it work?
It’s a micro-loan fund that’s available to small businesses in Martin County and can provide them with stages of funding. The Launch Fund, for the early stages of a business, goes from $5,000 to $25,000. The middle tier, or Growth Fund, for businesses in growth mode, goes up from $25,000 to $50,000. And there’s a larger fund, the Impact Fund, that goes from $50,000 to $250,000.
Why would a business choose the Martin Loan Fund over going to a local bank?
Convention loans aren’t always readily available for some businesses. And our hands-on approach plays a longer, more important role than simply making the loan. Our objective is to not only fund businesses that for one reason or another are not bankable. (We like to say, ‘We bank the unbankable.’) We also help the owners develop so they become strong entrepreneurs.
What makes this a good fit for our community?
Well, we work with small businesses and it’s no secret that 95 percent of Martin County businesses are small businesses.
How do you help the recipients of the loans you convey become more successful entrepreneurs?
A critical component of our services is the suite of training services that we have for entrepreneurs. We help with start-up services, finance, accounting, management. This not only lowers the risk of lending to them, but it helps create stronger businesses that in turn will help grow the economy.
How long has InclusiFi been around?
We have a 50-year heritage.
How is your application process different than a conventional bank?
Our motive is different than the banks, as we do character-based lending. We try to develop a high degree of intimacy with the businesses. We’re looking at character projection and the quality of their business model, ascertaining if that business is viable and if we can take a risk.
What can you share about the risks you incur?
Well, we don’t have the ability to do fractional lending. So, if you lose that dollar, we lose that dollar, too. That’s why we try to ensure that every step of the way we understand our clients’ needs. We’re able to do say, big contract financing, gap financing. Say, maybe they’ve found an opportunity to pursue a big partnership but don’t have the means to access the needed funds, we can help.
Where does the money you loan come from?
All our money comes from private banks. But the banks don’t make these loans directly because of their underwriting guidelines, restrictions and compliance requirements with the FDIC. They cannot do the same level of direct lending to small businesses. They don’t do the gap financing we do. They’re often unable to meet the immediate needs small businesses face. They might say, ‘Your idea is a wonderful business concept with tremendous potential but come back to us when you have two years under your belt.’
Are your rates competitive?
Yes! We can lend at a very competitive rate. Our highest rate is 10 percent.
That is competitive!
Yes. Compare that to merchant cash advances, most of which are at 18 to 22 percent rates.
That’s brutal. Can you help a business owner who took on loan with so steep an interest rate?
Absolutely! Quite a bit of our business is in refinancing those merchant cash advances, which are crippling our clients before we get involved.
You’ve only been active in Martin County for a short time. What’s the reception been like so far?
We’ve seen shy of 30 referrals and the first business we’ve helped, Old Havana Cafe, is celebrating its grand opening on Saturday. We have two more prospects in the pipeline—and that’s all in a short space of time.
We’re excited about this and appreciate the partnership. Once point of clarification, can you please underscore the fact that the BDB is NOT serving as a loan agent, co-singer, backer, or playing any part in the financial aspect.
It is definitely not. The BDB is our contract monitor—it’s not lending money. But thanks to our partnership, you provide an offset for some of our administrative costs and help integrate us into the community, ensuring that we’re achieving the goals and objectives as obligated by our contract arrangements. We’re very excited to continue meeting with more local business owners, help address their needs, and do our part in making Martin County’s economy stronger.
Learn more about how the Business Development Board of Martin County supports local businesses at www.BDBMC.org
