From seed funding to nonprofit support, local knowledge is essential
When it’s time to launch a startup or a nonprofit, the first step a founder needs to do is get funding. While donors and investors can play a major role in this aspect, founders often need a bank loan – and securing it can be a challenge, especially if they are starting a small local business.
Big banks often struggle to provide flexible lending options, and this is where community banks can fill the void in a number of ways. Community bankers, along with other local decision-makers, have an essential ingredient in ensuring the success of a local business: first-hand knowledge of the community, its socio-cultural climate and its current needs.
A loan by itself is not enough to start a successful or non-profit business. John Hill, SVP and Director of Community and Commercial Banking at 1st Security Bank, sees his role as a ‘connector’ within the community by connecting clients with opportunities such as alternative nonbank lenders, as well as microfinance options when needed. For example, Hill says there are nonprofits that specialize in helping startups or small businesses get started, so he connects clients with the right nonprofits for him.
The connections don’t end there. Hill also refers startups and nonprofits to other local businesses that can provide assistance in several areas necessary for a successful launch. For example, these companies often have to work with the local US Small Business Administration, and it is also best if they partner with local insurance companies, local public accountants (Chartered Accountants) and local legal advisers who have expertise in starting a business. By using these local resources, the founders have the advantage of working with a team that has a clear understanding of the community and its needs. They can get straight to work rather than trying to update their team on what’s going on in the community right now.
“As a community banker, you can offer all of these connections to help this startup or small business make sure they start the business the right way,” says Hill.
As a member of the community, someone like Hill knows resources that others don’t. “An example in Seattle is Ventures,” he says. “They have a business creator loan program with up to $ 35,000 available to support startups and small businesses.” He also cites the Rainier Valley Community Development Fund as an agency that helps businesses in their local community. “They are not banks, so their loans do not present the same risk that we are considering,” explains Hill. He adds that there are also local grants and government-backed options, such as the linked deposit loan program through the Bureau of Minority and Women’s Enterprises. “There are many options,” he says, and locals like Hill who are involved in launching the startup or nonprofit have extensive knowledge of these resources as they live and work in the area where the business is located. is being launched.
Shared goals for the community
Marc Côté is Executive Director of Parkview Services, a non-profit organization dedicated to ensuring affordable housing for people with intellectual and developmental disabilities. Côté, who works with 1st Security Bank, says it’s crucial they work with people who understand and support what the nonprofit is trying to accomplish. And, with the massive changes in the Greater Seattle area housing market over the past decade, it’s critical to have locals who have witnessed this firsthand.
“We live in these communities and we are invested in these local communities,” says Hill. “We live up to our core values and try to match those core values with the businesses and nonprofits we work with. “
For example, Hill volunteers with a local council that supports inclusive housing solutions and offers homeownership counseling. This alignment of core values, along with Hill’s knowledge of inclusive housing and the connections he has made through his volunteer work, are assets when providing advice and resources to Parkview Services.
Effective problem solving skills are crucial to running a successful business. Côté says that ten years ago, Parkview went through a difficult period and did not develop many homes between 2009 and 2012. One of its goals was to create more housing for the population served by the association. due to the major (and rapidly increasing) need.
“The board suggested waiting to get public funds before developing, but it was a very slow process,” says Cote. “So I finally got permission from the board of directors to take out loans to buy. Under this new model, Parkview can buy a property and then, after doing some pre-development work, apply for public funds. “By purchasing the property in advance, I can now house the population right away even though I will have to go to rehab when I have the public funds,” says Cote.
The first home Parkview purchased under this new model was in 2018 and grew out of community ties. “A church contacted us. They were already housing people with intellectual disabilities, but they weren’t interested in keeping this house, ”says Cote. “But they wanted to sell it to an organization that was engaged in disability housing work, so they sold it to me for $ 250,000 below market value.”
Support from a local lender helped Cote and his team identify challenges, sift through potential solutions, and find the one that best suited local conditions.
TO 1st security bank, we know your money is more than a number. It is the path to a better life, business and community. We call your neighborhood home and we’re committed to making it a better place to live.