Wells Fargo has selected Lancaster-based Community First Fund to receive a $3 million grant as part of its Open for Business Fund, a nationwide small business recovery effort.
A community development financial institution that serves central and southeastern Pennsylvania, Delaware and Camden County, New Jersey, Community First Fund will use the money for a new “Rebuilding Communities Loan Fund.”
An approximately $420 million small business recovery effort, the Open for Business Fund helps entrepreneurs recover and rebuild across the U.S. The focus is on increasing access to capital, technical expertise and long-term resiliency programs especially for racially and ethnically diverse small business owners who have been impacted by COVID-19.
“We are incredibly fortunate to receive this generous donation from Wells Fargo, which will allow us to provide small businesses in our region with much-needed financing to help them recover and rebuild,” Daniel Betancourt, president and CEO of Community First Fund, said in a release. “This partnership with Wells Fargo will drive our efforts to support local entrepreneurs and help our communities bounce back from the pandemic.”
Community First Fund’s “Rebuilding Communities Loan Fund” will initially target existing small business clients who took losses during the pandemic. They will now have access to low-cost capital. Lending efforts will be focused on businesses that add to the vibrancy of their communities, the release said, such as restaurants, retail stores, child care centers, barbershops/salons, grocery stores and bodegas.
Initially, Community First Fund was expecting to approve $10 million in Paycheck Protection Program loans to help small businesses stay afloat during the COVID-19 pandemic, said President and CEO Daniel Betancourt.
But the lender – a community development financial institution, or CDFI, headquartered in Lancaster – quickly realized the demand would be enormous. The fund targets historically underserved populations, such as minority and women business owners, and serves 15 counties in southcentral and southeastern Pennsylvania. Betancourt calls Community First Fund “a mission-based bank.”
So the $10 million target became $20 million – and the capital to cover that has already been raised, he said.
The money “came just in time for us to replenish our reserves,” Betancourt said.
Community First Fund received low-interest (less than 1%) loans from three sources:
• $5 million from U.S. Bancorp Community Development Corp., the tax credit and community investment subsidiary of U.S. Bank. The fund was among seven CDFIs chosen nationwide.
• $10 million from PNC Financial Services Group. Community First was among eight CDFIs to receive PPP support loans.
• $5 million from the Federal Reserve’s PPP Liquidity Facility.
For the Fed to lend to community development financial institutions is “unprecedented,” Betancourt said.
And the PNC money, he added, was approved within days.
In a press release, Zack Boyers, CEO of for U.S. Bancorp Community Development Corp., said: “CDFIs are committed to supporting entrepreneurs and small businesses in low-income and underserved communities and that means collectively, these CDFIs will help keep paychecks flowing to employees who may need it the most.”
Many of Community First Fund’s clients are “mom and pop” establishments, with less than a quarter of a million dollars in annual sales, Betancourt said. They include barber shops. Salons. Auto mechanics. Restaurants.
The lender disbursed 500 loans out of that $20 million, which comes to an average of $40,000 per loan. The average for African American and Hispanic entrepreneurs was $15,000, he said.
Ninety-five percent of PPP applicants were approved, and the loans were issued within 10 business days, Betancourt said.
Susan Louie, owner of Citronnelle at 110 W. Orange St. in Lancaster — a French restaurant “with a global twist,” as she described it — received $12,400. For the past two months, with the eatery closed, that loan’s been her only source of income, Louie said. The establishment’s seven or so employees including Louie and her husband, Rafael Perez, the chef.
Citronnelle, in business seven years, plans to start offering takeout service next month, and patio dining when it reopens, she said.
The owner of M.A.K. by Judy hair salon, Judy Henriquez, was approved for a loan of more than $5,000. Her business at 402 W. Orange St. in Lancaster has been shuttered since mid-March, she said; the salon employs two stylists in addition to Henriquez.
A couple of friends recommended she apply with Community First Fund. The money has been a big short-term help, she said.
The PPP is part of the CARES Act, an economic stimulus signed into law last month. At least 75 percent of the loan money must be used for payroll, Betancourt said. “They have eight weeks to document they’re doing that.”
If Community First Fund verifies it, the loan is forgiven, he said.
Tyrik Jackson is a repeat client. The owner of Sharper Image Barber Shop at 361 E. Chestnut St. in Lancaster and Premier Barber Institute in Norristown, he received three prior loans from the lender before being approved for $6,400 through PPP. Community First Fund “is an incredible resource,” he said.
The fund also invests in “catalytic” community revitalization projects, Betancourt said. One of those was the Holiday Inn Lancaster, the former Brunswick.
The Holiday Inn received a PPP loan of about $450,000. Sam Wilsker, co-developer of the hotel with John Meeder, said the money helped with payroll for their 75 employees and allowed them to bring back the chef and others who work in The Imperial restaurant, which now offers takeout service.
“We’re doing what we can to hang on,” Wilsker said.
The hotel has some guests, including health care workers, and college students who can’t go home because of the pandemic, he said.
Turning the Brunswick, which was about to be condemned seven years ago, into a high-quality hotel was very challenging, Wilsker said.
It was “a labor of love – and pain” even before the COVID-19 pandemic, he added, and Community First Fund was a major reason it came to fruition.
Effective July 1, Lancaster-based Community First Fund is forming a partnership with FINANTA, a community development financial institution in Philadelphia, that officials say will allow them to have a greater economic impact across their combined 20-county region in Pennsylvania, New Jersey and Delaware.
Combined assets between the two community development financial institutions, which will be organized as a single entity under the name Community First Fund, will total $101 million, and $129 million by 2024, Community First Fund officials said in a Tuesday announcement.
“Working with FINANTA as a partner in Philadelphia has made it clear we can achieve much more in the market when we join forces,” said Daniel Betancourt, president and CEO of Community First Fund. “Together we are stronger, and our combined resources can only increase the number of businesses and nonprofits we can serve in the future.”
As community development financial institutions, Community First Fund and FINANTA offer flexible lending opportunities to small businesses they say are underserved in financial services. However, there is little overlap between the array of products the two institutions offer, allowing them to complement each other’s programs.
During the coronavirus pandemic, the institutions have worked together to close nearly 300 Small Business Administration Paycheck Protection Program loans, providing approximately $15 million in emergency loans to small businesses who struggled to achieve financing at other lending institutions, Community First Fund officials said.
“As we watch the economic challenges stemming from COVID-19 unfold, we are deeply committed to helping businesses that historically have been unable to access sufficient capital – small businesses owned by low-income people, people of color and women,” Betancourt said in a statement.
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