Huntsville-based FORGE expects loan, staff growth in 2022

Huntsville-based nonprofit FORGE Inc. looks to expand lending and business services for entrepreneurs and small businesses, especially those owned by minorities and women. FORGE, an acronym for Financing Ozark Rural Growth and Economy, is a revolving community loan fund established in 1988.

“FORGE was established to address a gap in access to capital,” said Philip Adams, executive director at FORGE. “At the time, it was a group in sustainable agriculture for the bioregion that includes Northwest Arkansas, southwest Missouri and eastern Oklahoma.”

The group started with $11,000 that was loaned to members. Adams said that as loans were paid, the money could be loaned to other members. The nonprofit has grown to about $10 million in total assets, and most of that comprises loans as FORGE has few fixed assets, he said. Since 1997, the nonprofit has closed 864 loans for $17.96 million.

While the nonprofit continues to provide loans to farmers, agricultural businesses and rural communities, Adams noted that it had expanded lending into more urban areas.

In 2016, the board of trustees expanded the nonprofit’s service area to include the entire state. It broadened the outreach to other demographics that lack capital access, including African American and Hispanic business owners. Currently, central Arkansas accounts for about 40% of the nonprofit’s portfolio. Northwest Arkansas comprises nearly half of its portfolio, with the remainder going to entrepreneurs in other parts of Arkansas and bordering states.

Adams said the nonprofit looks to engage and support events and organizations connected to underserved entrepreneurs across the state. Also, the company plans to add staff in eastern Arkansas and central Arkansas.

“Those folks will be very key in terms of reaching entrepreneurs,” he said. “Ideally, they are already engaged and a part of the entrepreneurial community in their area.”

FORGE and ReMix Ideas recently launched the Imani Fund to provide small loans and technical assistance to underserved entrepreneurs. The fund, which the Arkansas Community Foundation supports, has received more than 60 applicants and provided more than $250,000 to approximately 10 borrowers.

As a microlender intermediary for the Small Business Administration, he said most of FORGE’s loans are less than $50,000. Small businesses loans from banks often start at $200,000, he noted. Also, FORGE doesn’t have a minimum credit score for borrowers, but Adams said it considers the prospective borrower’s credit and relationship history, business plan and collateral before making a loan.

FORGE works with partners, such as Credit Counseling of Arkansas, to help those qualify for a loan who don’t meet underwriting metrics, Adams said.

Amid the pandemic, demand rose for more flexible funding and alternative financing, and these needs were met mainly through federal programs and charitable foundations. Meanwhile, FORGE saw an increase in technical assistance offered to its borrowers. It’s connected people with programs, such as the Paycheck Protection Program or Arkansas Ready for Business Grant Program.

However, demand for loans declined amid the pandemic as people restructured debt. Total loans fell to $1.2 million in 2021, from $1.7 million in 2020. Yet, people’s outlook has started to change as they look to start or invest in businesses.

“I wouldn’t say people see a light at the end of the tunnel in terms of the pandemic,” he said. “But they say, ‘if we’re going to live in this tunnel, let’s live the way we want to live in this tunnel.’”

This year, he would like to see between 85 and 100 loans given at a total amount of about $2 million. And FORGE is on track. In the second half of 2021, the number of loans more than tripled from the first half of the year due to advertising and increased staffing.

FORGE has eight full-time employees and one part-time employee.