Delta leaders are adding another weapon to their arsenal for creating capital for entrepreneurial investments in the impoverished economic region.
Today, the Delta Regional Authority, U.S. Small Business Administration and the nation’s largest micro-lender announced a new partnership that hopes to provide small, low-interest loans for start-ups and small businesses.
ACCION Texas, which has the largest micro-lender portfolio in the U.S., is establishing ACCION Arkansas and expanding its ACCION Delta umbrella to boost its presence in the Arkansas Delta.
“Access to capital is one of the most critical needs of Delta small businesses. We are honored to have another partner such as Accion, the largest Micro Lender in the U.S., working with our other resource partners to bring capital and technical assistance to the state, and in particular the Delta,” said SBA District Director Linda Nelson.
The new partnership will specifically target small business owners in the Delta who are currently shut out from the commercial lending market and forced to turn to predatory lenders for capital.
The partnership is expected to:
- Provide a projected $1.2 million in micro-loans a year to small businesses in Arkansas and the Delta region. ACCION provides up to $50,000 for start-up businesses and up to $250,000 for established enterprises.
- Eliminate the role of third party and non-reputable lenders.
- Deliver $100,000 in new loans to Delta small businesses and entrepreneurs per month. This estimate breaks down to approximately 30 to 40 loans per month.
- Launch new micro-lending offices in Helena-West Helena and North Little Rock.
MICRO-LENDING AND ACCION
Micro-lending — also known as micro-finance or micro-credits — is a financial concept that has been used in modern times since the mid-1970′s. Originating overseas, micro-loans have been a popular tool for economic development in third-world countries.
Loans can range from as little as $500 up to $250,000. Typically, micro-loans work with businesses and individuals who may not qualify for traditional financing, who may have little or no collateral, or who have limited traditional lending resources in a region.
Established in 1994 as a non-profit organization, ACCION Texas is considered to be the largest micro-lender in the U.S. Since its inception, ACCION has made more than 12,000 loans totaling more than $112 million, according to its website.
ADDING TO THE DELTA ARSENAL
“Capital and ideas are the oxygen of small businesses. Yet for too long, Delta entrepreneurs had a choice: turn to shady, predator lenders or let their ideas die. Today’s common sense step ends that faulty choice – putting capital into the hands of responsible small business owners who create jobs,” said Delta Regional Authority Chairman Chris Masingill regarding today’s ACCION announcement.
His agency recently made a major pitch to Google, which is looking to invest billions of dollars in high-speed Internet service in underdeveloped economic regions of the country. Masingill sent a letter to top executives with the California tech giant asking them to put Google’s money where its mouth was and invest in the Delta.
"The Delta’s information technology challenges are a barrier to economic growth in the region. That reality cannot be understated. But the Delta’s reality is an opportunity for Google and Google Fiber," Masingill’s letter said. "Simply put, if Google truly wants to demonstrate the economic and educational paradigm shift created by access to the Internet, then it needs to begin with an underserved community. Our farmers and entrepreneurs, our students and workers, and our small business owners and large corporations have more to gain from a major investment in high-speed Internet than perhaps any group in the nation."
Also this week, Arkansas economic officials announced four major projects in Phillips County. Four different companies are investing more than $4 million and adding nearly 90 jobs in the east Arkansas community of Helena-West Helena.