BusinessReport.com

The ability to borrow money often is the difference between being in business and not being in business.

Unfortunately for smaller entrepreneurs, conventional lending institutions won’t even look at you if all you need is a few thousand bucks. That’s a bad thing if you consider entrepreneurship on any scale a good thing for a community.

Enter Enterprise Corporation of the Delta/Hope Community Credit Union and ACCION USA, a private non-profit that provides “microloans” to entrepreneurs of low and moderate income. ACCION issues the loans and ECD/HOPE services them—a partnership that recently extended its reach to the Baton Rouge area through its New Orleans branch. ECD/HOPE and ACCION have generated more than $250,000 in microloans in the New Orleans area and along the Mississippi Gulf Coast.

The partnership has allowed people like Woodrow Wilson, owner of Gulf South Animated Motion Technologies, to keep their businesses alive after Hurricane Katrina. Before the storm, Wilson’s firm sold wholesale drugs and medical equipment to New Orleans hospitals. He was also trying to launch a line of clothing embedded with fiber optics—your team or company’s name in lights.

The company used to be on Howard Avenue near Xavier University. Then Katrina delivered six feet of water that Wilson’s shop steeped in for three weeks. He lost everything. Though 2005 was a profitable year, Wilson says, the company was “dead in the water” through 2006. He was determined to start over but was turned down repeatedly for bank loans.

“I didn’t have any collateral or inventory after Katrina,” Wilson says. “Our balance sheets were horrible for any type of conventional lending.”

An organization called GoodWorks Network put Wilson onto ACCION, which gave him a $4,000 loan after doing due diligence on his application.

“That sort of helped us catch our breath for a while,” he says.

Wilson, who split his wholesale company off from the fiber optics thing, relocated to Baton Rouge. His goal is to get his products—patented programmable, fiber-optic hats for LSU, Southern and Grambling, which licenses them—into more retail locations.

Wilson also received state assistance in the form of a grant program aimed at rescuing formerly viable companies put out of business by the hurricanes. But he considers his microloan a lifeline. The interest rates are low, the terms generous compared to most typical loans. Borrowers can also pay off their loans early without penalty.

Wilson sees it as a stepping stone to more substantial loans, somewhere down the road, as he expands his business. Business owners with companies that are formal or informal, licensed or not, and based in homes, offices, storefronts or marketplaces are eligible for ECD/HOPE ACCION loans from $2,000 to $25,000, with terms from three to 60 months.

“They want you to succeed, and they will work with you if you have a little bump,” Wilson says.

Dennis Manshack, ECD/HOPE’s vice president for commercial lending in Louisiana, says the microloan program is flexible when it comes to collateral, and has even made loans to borrowers with no collateral but good credit. Also, the application process is easy, he says. Three months of bank statements will usually do it. Manshack says no other lender is originating microloans in Baton Rouge.

“It’s something that Baton Rouge has needed for a long time,” Manshack says. “It’s something that all the urban centers need. That’s why we’re entering the market. We have set aside $1 million for microloans. That’s a lot of loans, when the average is about $10,000 or $11,000.”

Lacheta Saul got $5,000 through ACCION to start a small accounting, tax preparation and mortgage service company in Gonzales. She found out about it through a friend who secured a loan through ACCION to set up a daycare center. Saul used her own loan for things like advertising, computers and printers.

“The people were nice and it was a simple process,” she says. “You basically fill out the loan paperwork and they walk you through it. As it goes through they’ll call you and let you know what’s going on. It seems like a pretty good deal.”

Already she’s had several clients themselves asking how to go about getting a loan to start up a business. Saul refers them to ACCION. She plans on expanding her business and thinks the time has definitely come for microloans in the Baton Rouge market.

“Yes, there is a need for this kind of thing around here,” Saul says.