Epicenter, lenders launch $15M loan fund
A new $15 million Memphis loan fund is aimed at businesses that fall short of conventional bank loan requirements, particularly minority- and womenowned firms.
Epicenter and Pathway Lending on Monday announced the Memphis Small Business Opportunity Loan Fund, seeded by initial capital from Pinnacle Financial Partners, First Tennessee Bank and Regions Bank.
Epicenter is an entrepreneurship hub leading efforts to create 1,000 new entrepreneurs in Memphis by 2024. Pathway Lending is a Nashville-based, regional nonprofit community development financial institution.
Pathway has been making loans in Memphis since 2003 and servicing up to $15 million in Memphis area loans out of Nashville. The expanded commitment puts a point person in Memphis in vice president Travis Hughes and more than doubles Pathway’s revolving loan fund available for Memphis.
Bankers said the Pathway program provides an alternative to banks merely rejecting loan applications and telling applicants to come back when they’re financially stronger.
“We don’t just have to tell them ‘no’ and ‘come back when you’re ready,’” Pinnacle senior vice president Herman Strickland said. “We actually have a place to send them to that can give them what they need so they can (eventually) come back to the bank.”
Pathway will provide business loans ranging from $5,000 to $1 million, and borrowers may also receive technical assistance from business advisers.
Detailed program offerings and requirements will be discussed in sessions 5:30-6:30 p.m. June 25 and 8-9 a.m. June 27 at Epicenter’s office at 902 S. Cooper. Registration is online at epicentermemphis.org.
But Hughes, vice president, commercial lending and client relations, said applicants can inquire about loans immediately by calling him at (901) 9309367 or emailing travis.hughes@pathwaylending.org. His office will be in the Epicenter building.
The Pathway expansion launches amid continuing concerns about the health of minority business in Memphis.
The city last week announced The 800 Initiative to increase annual revenues of 800 minority-owned companies by $50 million by 2023. Black business-
es’ estimated share of citywide business receipts in 2016 was less than 1 percent.
Pathway will become another layer within Epicenter’s “capital stack” concept that matches entrepreneurs with the type of capital, from angel investment to bank debt to equity, based on the stage of their business.
“This fund is a flexible and affordable way to support entrepreneurs and business owners — particularly in communities of color — with capital at a critical time in their growth,” said Leslie Lynn Smith, president and chief executive officer of Epicenter.
Epicenter works with economic development, academic, corporate and government partners to support growth of new and existing tech startups, creative and community-based businesses, student entrepreneurs and other business across multiple industries and stages of growth.
Pathway serves Tennessee, Alabama and Kentucky. It has made more than $225 million in loans and provided more than 48,000 hours of technical assistance since 1999.
About 40 percent of Pathway loans have historically been to women-owned businesses, and about 20 percent to minority-owned, president Clint Gwin said.
Pathway currently has about $10 million to $11 million in loans outstanding in Memphis.
Hughes said the new program is an opportunity to significantly expand Pathways’ efforts in Memphis.
“While we have an existing portfolio of clients in Memphis, we see tremendous opportunity in this new partnership with Epicenter to reach more entrepreneurs in this region, and, together with Epicenter and its network partners, provide a stronger set of tools to help unlock their growth potential,” Hughes said.
“We’re dedicated to growing the economy and building wealth in underserved communities, and we’re thrilled to bring that dedication to Memphis.”
Pathway combines financing, training and education, working with partners such as Epicenter, Gwin said. The goal is to groom a borrower to qualify for a conventional bank loan within three to five years.
Interest is in the 8-10 percent range, a substantial savings from credit card debt run up by some entrepreneurs, but 2-3 points higher than a bank business loan in the current market, Gwin said.
“Most of our deals are referred to us by bankers. (Businesses) go into their banks and they’re not quite there,” Gwin said. “Those bankers are partners of ours and they know to refer them to us.”