Sonoma County Loan Fund launches with $255K in microloan pledges

Sonoma County startups and entrepreneurs in need of financing have a new pool of funds to dive into, thanks to pledges from several financial institutions.

A partnership of eight institutions has offered $255,000 to make “microloans” available to small enterprises that typically do not qualify for traditional financing or have little to no access to it. Pledges have been received from Luther Burbank Savings, Exchange Bank, Redwood Credit Union, Summit State Bank, Tri Counties Bank, First Community Bank, Beneficial State and Presidio Bank.

“Access to capital is consistently cited as one of the top needs of small businesses seeking to start, grow and expand their operations,” said Sonoma County Economic Development Board (EDB) Executive Director Ben Stone during the board’s Spring Economic Forecast Conference held at the DoubleTree Hotel in Rohnert Park.

The idea for an alternative loan fund surfaced two years ago at the EDB after hearing the problems local entrepreneurs were having getting financing to launch or expand their businesses while still in formative stages.

In 2014, an agreement with Working Solutions (workingsolutions.org) and local lenders led to the launch of the first pilot microlending pool. Two years later, about $750,000 in microloans had been made to Sonoma County businesses. Based on the success of this program, the EDB reached out again to local lenders to invest in a new loan fund to meet capital needs of additional startups and entrepreneurs.

Board of Supervisors Chairman Efren Carrillo called these partnerships “an example of local financial institutions stepping up to fill a need by enabling local entrepreneurs to flourish and create jobs in Sonoma County.”

Working Solutions will make loans of $5,000 to $50,000 with up to five-year repayment terms at relatively low fixed-interest rates of 8 percent to 10 percent. Technical assistance and mentoring are integrated into the post-loan process for participating businesses.

The EDB says these investments will benefit the small business community and provide lending partners with Community Reinvestment Act credits and future referrals. To date, the following Sonoma County firms have received microloans: Hip Chick Farms, Nexo Advertising, Sea of Change, The Netary, Sonoma Gymnastics Academy and Style by Malia.

For example, Hip Chick Farms in Sebastopol received a $50,000 loan in two parts in 2013 and 2014.

“Both loans helped us significantly at the time of receipt,” said Serafina Palandech, co-owner.

The funds were used to launch the business in early 2013 then helped print new packaging in 2014. Palandech credited new packaging with a 500 percent increase in sales. The chicken products are sold in more than 1,500 stores nationwide, including Whole Foods Market and Target.