Small Florida Credit Union Launches New Loan Program for Small Businesses

Sheilah Montgomery, president/CEO of the $24.1 million Florida A&M University Federal Credit Union, said she tells members looking to open a small business not to work for money, but to work for their passion, and then the money will come.

“If you’re passionate about your business, you will be successful,” Montgomery said.  “What we provide is just the resources that make it happen. If your heart is in it, I promise you that you will succeed.”

After all, Montgomery said that she came out of retirement because she is passionate about the credit union work and its mission to help members succeed.

The Tallahassee, Fla.-based FAMU FCU will be able to deliver a lot more resources to fuel that small business passion after it recently announced a partnership with the Tallahassee-Leon County Office of Economic Vitality to launch a new $1 million microlending program for women and minority owners of small businesses. The money for the revolving loan fund comes from the CARES Act, passed by Congress last year to provide an economic stimulus for communities affected by COVID-19.

The pandemic’s impact on small businesses, particularly minority-owned and women-owned businesses, has been particularly devastating, according to a National Bureau of Economic Research paper authored by Robert W. Fairlie of the Department of Economics at the University of California at Santa Cruz.

His research determined the number of small businesses in the U.S. plummeted by 3.3 million or 22% from February to April 2020, the largest decline on record. African American businesses were hit especially hard, experiencing a 41% drop, while businesses owned by Latin Americans fell by 32% and 25% for Asian-American business owners. Female-owned businesses were also disproportionately hit hard by a 25% drop, according to Fairlie.

In the Sunshine State, an estimated 40% of small businesses were forced to close shop for good because of the pandemic, according to research released in October by the Florida Small Business Development Center in Pensacola.

FAMCU FCU’s new SmartSteps Microlending Initiative will offer microloans of up to $50,000 with low interest rates of 3-4%, and can be used as a business line of credit, for business equipment purchases, or for operating capital or other negotiated funding. What’s more, applicants with lower credit scores will be considered for loans and repayment terms are negotiable.

“It’s OK that your credit score could be low, but guess what? We can help you to get that better. Or if you do not have collateral, guess what? Let’s figure out how we can get you some non-collateral money so that we can at least get you in that business,” Montgomery said. “We’re proud to say with the micro lending program we are going to have unsecured lines of credit of up to $15,000. We feel like that’s important because a lot of times you really need to have a lot of credit to get maybe a contract, or maybe you just need that line of credit set aside for any emergency.”

Montgomery said she is excited about the SmartSteps Microlending Initiative because it gives small businesses more financing flexibility.

“The micro lending program to me is very special and timely because right now this is the time that businesses are going to have to repurpose how they do business,” Montgomery said. “And if you know anything about the past, you know that when there’s times of uncertainty, great things can come from small businesses.”