A public-private partnership involving The Community Foundation Mission Investments Company and the City of New Haven launches new small business loan program.
NEW HAVEN, CT -- A new public-private partnership is offering low-interest and partially forgivable loans to local minority-owned and women-owned small businesses. The initial loan pool of $1.5 million will offer loans of up to $25,000 for small businesses located in New Haven and the lower Naugatuck Valley cities of Derby and Ansonia.
The Partnership Loan Program for Minority- and Women-Owned Businesses in New Haven and the Lower Naugatuck Valley was created through a partnership among The Community Foundation for Greater New Haven, HEDCO, Inc., the Amour Propre Fund and The City of New Haven. Hartford-based HEDCO, Inc. will administer the program, assist businesses through the application process and provide financial planning services.
Gov. Ned Lamont praised the partnership at the program’s official launch event on the steps of The Community Foundation Tuesday along with Lt. Gov. Susan Bysiewicz and New Haven Mayor Justin Elicker.
“There is nothing more important to our state and to get it going again, than our small businesses,” said Lamont.
“It is critical that we continue to invest in our minority businesses,” said Elicker. “This program will provide much needed assistance in New Haven, and I am grateful of all those that worked to pull it together so quickly.”
New Haven Deputy Economic Development Director Cathy Graves said that the program fills a gap by supporting businesses that do not have access to traditional bank loans.
“This is truly a partnership. Municipalities can’t do it alone and the private sector can’t do it alone. We are all in this together,” said Graves.
The lending program will offer four-percent term loans of up to $25,000 to qualifying minority- and women-owned small businesses in New Haven, Derby and Ansonia with 20 or fewer employees. Eligible loans in good standing will be partially forgiven after one year.
The Community Foundation for Greater New Haven contributed to the loan pool from its subsidiary, The Community Foundation Mission Investments Company (TCF-MIC).
“This program is about us coming together to address the impacts of the shutdown, support the recovery and invigorate the local economy,” said A. F. Drew Alden, President and CEO of TCF-MIC and SVP for Investments & CFO for The Community Foundation. “It is part of The Community Foundation’s larger and long-term strategy to create opportunity and build equity in our region.”
HEDCO, Inc. will administer and underwrite the loans. In addition, it will work with owners to establish the credit history and financial records necessary to build their businesses and access traditional lenders.
“We are excited about another opportunity to provide support and financial assistance to those businesses that have not been able to take advantage of the mainstream opportunities out there, and give them the benefit of the knowledge and the strategies to make them successful,” said HEDCO, Inc. Vice President and COO Kim Hawkins.
The loan program comes as the federal aid programs created in response to the economic shutdown caused by the coronavirus failed to benefit many minority-owned small businesses. An analysis by the Center for Responsible Lending found that the application process and fee structure for the federal programs made it difficult for small businesses—particularly businesses owned by people of color--to qualify. Just 12% of Black and Latino business owners who applied for the federally administered PPP (Paycheck Protection Program) loans reported receiving what they asked for, according to a survey by Global Strategy Group.
“The Pandemic has seen the American Dream interrupted. It is predicted that up to 40% of minority and women-owned businesses will not survive the losses,” said Lindy Lee Gold, President of the Amour Propre Fund and a specialist with the Connecticut State Department of Economic and Community Development. “We are blessed to be in a position to “walk the talk” and promote equity and inclusion to these small business owners. It is important to contribute more than dialogue if you are able.”