Mercy Corps NW: Small Business Loans, Grants, and Classes
Mercy Corps Northwest (MCNW), the regional branch of the global development and relief NGO Mercy Corps, serves a crucial role for local startups. In the past 10 years, MCNW has lent more than $2.5 million to over 250 small business owners in the Portland area. In addition to business loans, MCNW also provides matched savings accounts and courses in business fundamentals. Scott Onder, their lending and strategy manager, was kind enough to answer some of our questions about the ways in which MCNW supports local business owners.
Impact Entrepreneurs: How would you describe MCNW’s lending and IDA programs in a single tweet?
That’s tough—is a link to our website cheating? I’ll try to stick to the 140 character limit:
“Grow your #smallbiz, build #credit w/@MercyCorpsnw #microloans up to $50k + IDA savings-match grants. #Startups welcome!”
What is an IDA program, anyway?
Our Individual Development Accounts are an opportunity for low-income entrepreneurs to earn a grant to invest in business assets like equipment, websites or relevant education. To accomplish this, new and experienced business owners alike take a 6-week business course, develop an effective business plan, and save $1,334 over a 6 to 24 month period. This savings is then matched with an additional $4,000 grant. Every year over 100 entrepreneurs start and grow businesses with Mercy Corps IDAs.
Mercy Corps loans go up to $20,000 for new businesses and up to $50,000 for businesses that have been in operation for more than a year. We occasionally partner with other lenders to extend financing up to $200,000.
How large are your loans, and what types of businesses are eligible?
We work with a very broad array of businesses ranging from contractors to bilingual schools and health clinics, to commercial bakeries, bike manufacturers, retailers and breweries. They may be looking to finance equipment, growth inventory, vehicles, or space expansion. A common element among our borrowers is that traditional lenders were unable to meet their needs. Most of our clients are low-income, and we will also work with moderate-income business owners who are creating jobs but unable to obtain commercial bank financing.
What does the application process look like, and how long does it take?
The process begins with a short online loan inquiry form. From there, a loan officer will help navigate a prospective borrower to a full application, also online. We ask for many of the same materials that a bank would: financials, tax returns, credit history and other documentation. For startups, we request a business plan. Once a client submits a complete application, it can take anywhere from 2 to 8 weeks for our loan committee to make a decision. The committee is made up of business owners, instructors, and bankers from outside our organization who make the final decision.
How much do you charge in interest and fees?
Interest ranges from 8 to 12%. Fees range from 1 to 4%
What are your collateral requirements?
Unlike banks, we do not have specific collateral requirements. We do want to see that the business owner has invested what they are able to and are fully committed to the success of the business. We accept personal assets as collateral and take a first interest lien position in the form of a UCC-01 on business assets.
What sets you apart from a more traditional lender, such as a bank?
We offer our clients more educational opportunities than a traditional lender might. These include classroom training, one-on-one counseling and other support to help an entrepreneur get ready to apply. Once approved, we are very hands-on with our clients and try our best to link them with resources that will give them the best chance of success. Also, Mercy Corps NW will approve loan amounts that are substantially smaller and, often, riskier than a bank would consider. We will work with new business owners who have limited track records, limited or no net worth, credit challenges, and lean balance sheets.
Where do you receive the funding for your programs?
Our funding comes from a diverse range of sources including foundations, local, State and Federal government, commercial banks and corporations, and many individuals throughout the Northwest.
What other programs do you have to support entrepreneurs?
Mercy Corps NW offers a range of training resources including seminars on business topics, business planning courses as well as mentoring and consulting opportunities for our clients.
We are a Small Business Administration Women’s Business Center and also work along with partner organizations to assist underserved minority- and women-owned businesses to form business teams for the purpose of bidding for federal and corporate procurement contracts.
We also have an Agriculture Project that helps immigrant and refugee farmers access land and bring their crops to market through CSAs and farmers markets.
Do you have a memorable story of how an IDA or loan helped a local business?
We have a number of memorable clients, which makes my job a lot of fun. It never ceases to amaze me how resourceful entrepreneurs can be, especially when they have limited funds to accomplish their goals.
One of my favorite examples of this is a couple that took out a small loan to purchase basic brewing equipment and have turned a small home brewing operation into a really top-notch brewery, Captured by Porches. With remarkable ingenuity, they developed a high-quality line of beers that they distribute throughout the region, and an authentic brand that competes with much larger breweries. They reach out to customers in unique ways, including building a fleet of mobile pubs which serve their beer in food cart pods and farm stands. They care about the environment (they use reusable bottles and recycle most of their waste) and contribute to the community in very genuine ways.
To learn about the emerging field of impact investing in local and sustainable enterprises, please register for the upcoming PSU Business Briefing Breakfast “Meet the Impact Investors: In Pursuit of Profits, Purpose and Planet.”
Entry filed under: Opportunities for social innovators. Tags: business classes portland, business education, business grants portland, business loans portland, idas, individual development account, mercy corps, mercy corps northwest, portland startups, small business classes, small business grants, small business loans, startups.