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A Boon for Small Business

news2Opportunity Fund gains new support for microloans in Santa Cruz County

Small businesses, or those with fewer than 500 employees, provide 55 percent of the total jobs in the United States and more than two-thirds of the net job growth in the country, according to the United States Small Business Administration (SBA). With this in mind, the key to rebuilding the strength of Santa Cruz County’s economy may lie in the hands of entrepreneurs and small business owners.

At the same time, the SBA reports that only 50 percent of start-up companies survive after five years, and about one-third of these companies still exist after 10 years.

Although there are multiple factors that may cause an emerging business to fail, one of the primary elements in their survival is an access to capital, which may not be available to entrepreneurs who don’t own a home or have the necessary amount of assets to attain a loan from a commercial bank.

“Naively you think you can put together a big business plan, that you have expertise, and you have a little bit of start-up funds, but you need to get more money from a bank to start your business, and they won’t loan it to you,” says Susan Schai, founder of the local business Scholastic Expeditions. “Even small business loans are out of reach for most people.”

In order to spur local job growth and provide nascent companies with the capital they need to grow and maintain their operations, micro lenders like Opportunity Fund have stepped in to provide a safety net for entrepreneurs who may not be eligible for a conventional loan.

“There is a slice of the economy, particularly for those who can’t access traditional sources of capital, who are hard-working, entrepreneurial people,” says Bud Colligan, local investor, community activist, and member of Opportunity Fund’s leadership council. “This gives them an opportunity to not only make a living, but also to hire other people and create new jobs.”

A California-based nonprofit micro lender, Opportunity Fund expanded its outreach to Santa Cruz and Monterey counties in May 2013. It recently attained financial support at the start of 2014 from the David and Lucile Packard Foundation, among others, to help realize its goal of providing 100 loans in the next two years to businesses in the two counties.

“When it came to reviewing support for Opportunity Fund’s expansion to Santa Cruz County, we were excited by their potential to contribute to the county’s social and economic life, given Opportunity Fund’s 20-year track record,” writes Jessica Mancini, program officer responsible for grant making in Santa Cruz County at the David and Lucile Packard Foundation, in an email to GT. “We were also encouraged by the support of local partners with whom we work for bringing Opportunity Fund’s work to the area.”

Opportunity Fund founder Eric Weaver created the nonprofit with hopes that small loans could be the impetus for growth in California’s economy. Since its inception in 1995, and with the help of Colligan and others, Opportunity Fund has become the largest nonprofit micro lender in the state.

Since its launch in Santa Cruz County last spring, Opportunity Fund has awarded microloans to 19 local businesses, with a total of 44 microloans distributed in both Santa Cruz and Monterey counties.

“It gives everyone, whether you have a small business, a medium business, or a large business, a fair shot at making it,” says Colligan. “The name Opportunity Fund is indicative of that role. We provide opportunity to all comers, not just to a select few.”

Schai, who was awarded a microloan by Opportunity Fund in July 2013, first developed a love for travel as a foreign exchange student in high school. After working for an education-based travel agency as an adult, she realized that she wanted to create a business of her own.

news2Local Susan Schai put the microloan she received from Opportunity Fund in 2013 toward taking students on science-based education trips through her company, Scholastic Expeditions.“As is typical of entrepreneurs,” says Schai, “you get an idea from somewhere you’ve worked before, and think you can do an even better job.”

Schai attempted to attain a loan from various local commercial banks, whose minimum loan amounts range from $100,000 to $250,000. After being denied, she decided to try Opportunity Fund, which an advisor at the Central Coast Small Business Development Center at Cabrillo College referred her to.

Scholastic Expeditions, which now employs eight people, organizes and facilitates trips to countries such as Costa Rica, where young people are given a chance to explore new environments with a focus on applied science.

Due to the state laws that regulate businesses like Scholastic Expeditions, Schai is unable to use the deposits that her clients make for their expeditions until after the trip occurs. This creates a temporary shortage of capital for Schai. With the microloan she attained from Opportunity Fund, Schai was able to maintain her business as she waited for the trips to take place.

In the future, Schai sees her business growing and expanding. As it does, she plans on returning to Opportunity Fund for additional microloans that will help her business thrive.

“It was always the plan,” says Schai. “That first loan was kind of an opening relationship loan. I know I can count on them for another loan. It might be sooner [rather] than later.”

Comments (2)Add Comment
Microloans with returns for lenders?
written by NYtransplant, January 26, 2014
Does anyone know of any microloan organizations for California small businesses that actually offer returns for lenders, in the example of www.lendingclub.com and https://joinmosaic.com?
Mr
written by Jimmy K, January 21, 2014
Traditional banks are still not lending no matter what incentives the govt provides. Alternative financing is what's been saving the day. Seems like most savvy business owners know exactly where to turn. Companies like Opportunity Fund, Yendora, KIva to mention a few are making a difference.

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