New York Credit Unions Breathe New Life into Stagnant Small Business Loan Fund

SCHENECTADY, N.Y. – After nearly three years of stagnant activity, a collaboration between local credit unions and banks here is on a mission to revive a small business loan fund. Launched in 2003 by the Schenectady County Community Business Center, the Schenectady County Business Loan Fund was initially created as a $550,000 gap-financing program originally funded by 11 financial institutions. Small business owners had access to loans up to $35,000 but the funding was not available to start-ups. The fund has recently expanded to include the latter and loans have been bumped up to $50,000. Three more financial institutions have also signed on to help the fund for a total of $650,000 now invested. The $1.2 billion State Employees FCU; $418 million Capital Communication FCU; $406 million Sunmark FCU; and $180 million First New York FCU recently put up $50,000 each towards the fund. The Schenectady area is in the throes of a revitalization period brought on when General Electric closed down here leaving a community lacking, said Paula Stopera, president/CEO of Capital Communications FCU (CCFCU). “It became an underserved community but now it’s starting to grow,” Stopera said. “We’re interested in helping small businesses contribute to that revitalization.” CCFCU just rolled out its commercial lending program in June and plans to close $10 million in loans by the end of the year. The fund will go a long way to helping those who are looking for another financial resource. “Small businesses have difficulty getting loans. It’s probably the hardest group to acquire funding,” Stopera said. “Many of them are successful and some are not. The fund’s board are committed to people that want to be successful.” Sunmark FCU was one of the original investors in the fund and plans to keep an “open-ended” relationship with it, said Bruce Beaudette, president/CEO. The fund, along with the credit union’s community charter and its MBL program, allows it to reach out to people of modest means. “It just seemed like a good place to go,” Beaudette said. “Maybe some of these start-up companies will become successful and will come to us.” Another gratifying piece was dispelling the notion that credit unions and banks can’t work together, Beaudette said. “With all the fighting going on between banks and credit unions now, it’s just nice to have some positive implementation between the two,” he said. A representative from each of the 14 financial institutions makes up the loan fund’s board of directors along with officials from the area’s SBA office and the New York Business Development Corp. They’re responsible for making the loan decisions and the payments are made back to the credit unions and banks. First New York FCU (FNYFCU) signed on with the fund two months ago and also sees the alliance as an opportunity to open doors for small businesses, said Mike Krywinski, director of lending. “We recently went community charter so this is a good way to make ourselves known,” Krywinski said. FNYFCU rolled out its MBL program in January and while it hasn’t aggressively sought out loans, it does continue to build its portfolio, Krywinski said. State Employees FCU (SEFCU) has been doing business loans for eight years and is among the first credit union in the area to go down that route, said John DeCelle, senior vice president of sales and marketing. The fund will not only help with start-ups in the area, it could help keep existing jobs there too. “This (involvement) is an extension of the credit union commitment to the community,” DeCelle said. “It ties back to people helping people.” SEFCU has more than $30 million in its commercial lending portfolio and more than $1 million in SBA loans, DeCelle said. In addition to the fund tie, the credit union also has two branches here. “The commitment from the credit unions and banks to the fund speaks volumes to their investment in the community,” said Alysia Miller, Schenectady County Community Business Center director of business development and administrator of the fund. “Everyone benefits,” Miller said. “This is tremendous for Schenectady County because as is the trend in a lot of cities, the bigger businesses are moving out and leaving a void.” Miller said the center will continue to court more potential investors in the fund. -