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Nebraska Enterprise Fund fills financing gap for small businesses

Nebraska Enterprise Fund fills financing gap for small businesses

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Eric Martin thought he had everything in place when he went earlier this spring to talk to his banker about getting a loan to prepare his business for a big expansion.

As president of Waterjet Cutting Specialists, a Lincoln-based manufacturer, Martin knew the company had millions of dollars in assets, including real estate and machinery. But even though the company is in good shape financially, it didn’t quite have the liquidity to secure all the financing it needed.

“It always seemed it’d be quite easy to get cash to do a project, but it’s not like that at all,” Martin said.

That’s where Nebraska Enterprise Fund, an Oakland-based community development financial institution, or CDFI, came in.

The organization stepped in as a partner of Martin’s bank and earlier this week approved an additional $150,000 loan to help Martin’s company grow from 26 employees to 44 employees over the next 18 months.

Since the recession, finding capital in relatively smaller amounts has been a tall order for small businesses, but CDFIs like the Nebraska Enterprise Fund are increasingly answering the call for these “microloans,” said Mark Pinsky, president and CEO of Opportunity Finance Network, a nationwide group of CDFIs and other such opportunity investors.

“They’ve evolved over time to reflect what’s happened in this industry,” said Pinsky. “As banks sort of pulled back from the microloan market, CDFIs have

stepped in and started making bigger loans.”

It seems those efforts are helping.

The most recent survey of small-business owners from the National Federation of Independent Business showed few respondents complained about access to credit.

“We’re here to help the businesses that are starting to get going but for whatever reason aren’t fully bank-ready or the bank can only go so high,” said Jim Reiff, executive director at Nebraska Enterprise Fund.

The organization’s upper limit for loans is $150,000 but its average loan amount is $42,000. It also helps businesses get loans through other organizations.

Similar groups in Nebraska include the Rural Enterprise Assistance Project, or REAP, at the Center for Rural Affairs in Lyons, which is presently seeking certification as a CDFI. Others include the Ponca Tribe of Nebraska’s First Ponca Financial Inc. and the Winnebago Tribe of Nebraska’s Ho-Chunk Community Development Corp.

More than 1,700 small businesses in Nebraska have found capital through Nebraska Enterprise Fund, Reiff said at an event celebrating the group’s 20th year on Tuesday night at the Embassy Suites La Vista. About 50 people turned out to hear from a handful of local entrepreneurs in industries ranging from urban and rural revitalization to health care and food production.

Founded as Nebraska Microenterprise Partnership Fund in 1994, the organization started out lending money to intermediary organizations like REAP and Ho-Chunk, which then lend money directly to business and nonprofit enterprises. Its top funders are the U.S. Department of the Treasury, the Nebraska Department of Economic Development and First National Bank.

In 2010, the organization launched its direct loan program and has since been thriving.

Reiff said it has almost doubled its outstanding loan portfolio to more than $4.2 million since 2012, thanks to partnerships with lenders, intermediaries and state and federal agencies. It either wrote or helped secure 166 new loans in 2013 that led to the creation or retention of 457 jobs.

Sarah Martin, Eric Martin’s wife and general manager at sister firm Planet Earth Distilled Drinking Water, said Tuesday night she was impressed with how fast the additional alternative funding came through.

“We truly appreciate that and will personally benefit, but we also appreciate it as Nebraskans,” she said. “It’s good to see growth of local companies.”

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As a community development financial institution, or CDFI, the Nebraska Enterprise Fund is one of many organizations that have stepped up since the recession to fulfill relatively smaller-dollar financing needs of small businesses, particularly those in low-income or underserved communities.

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