Ohio microlender ‘will not allow businesses to fail because we’re not there for them’
Apr 4, 2020, 9:28am EDT Updated: Apr 4, 2020, 9:35am EDT
Economic and Community Development Institute is still lending to and advising small
businesses while deferring payments for many clients – all while negotiating with its own
lenders to respond to the unprecedented economic halt caused by the coronavirus pandemic.
Founder and CEO Inna Kinney estimates the microlender’s revenue will decrease by
$500,000 over the next two months – so far this month 60% of clients who never missed a payment before are late.
“That’s scary for me as a business because I’m giving forbearances,” Kinney said. “I pray to God these businesses will survive.
“I will not allow businesses to fail because we’re not there for them. I made a commitment when I opened this organization that we were going to help.
Most of ECDI’s clients are “Main Street” businesses in the hospitality or non-essential categories that have been forced to
close during a statewide stay-at-home order to prevent the spread of Covid-19. That order is now extended to May 1.
That hurts ECDI’s ability to pay lenders, replenish funds from which to lend to new clients and maintain its operating budget.
ECDI operates throughout the state, with five offices. Last year it generated $8.5 million in loans. In its 16 years, it has
loaned $42 million to more than 2,000 businesses, ranging from $750 to $350,000.
The Columbus nonprofit can help businesses access emergency relief from the U.S. Small Business Administration including disaster loans.
Franklin County also approved approved $675,000, a $500,000 increase from what was budgeted, in federal block grant and general fund dollars toward generating new loans.
Any one ECDI loan is made up of different chunks including SBA and, depending on eligibility, more than 40 other banks,
investors and organizations such as the Columbus Foundation.“The majority of our clients have multiple funds in their loan,” Kinney said. “I still have to pay my lenders.
“I have to pay the banks money I owe, without having the income from the businesses who can’t pay me,” she said.
“People go out of business, what can we do?” So ECDI is doing everything in its power to help those businesses survive.
The SBA is covering the federal portion of a loan for six months, but that can represent a fraction of a loan, Kinney said.ECDI is offering a two-month deferment, with no guarantee of how it can cover that.
“I’m taking a huge chance right now,” she said. “When I founded ECDI, my whole goal was to help businesses. We want to give them a chance, to for the next two months not worry what they owe to ECDI.”
ECDI has generated about 80 new loans since the crisis began. Meanwhile its counselors are helping with business strategy or referral to resources, and the Food Fort commissary is open to food trucks still operating and following social distancing precautions
“We are inundated,” Kinney said. “Everybody’s coming to us right now seeking assistance. I don’t have the capacity to help everybody. “We’re working 15-, 18-hour days right now, all of us.”
The organization has a three-prong strategy, she said. First comes the immediate triage. The next phase will be how to help restaurants and others when the time comes to reopen.
The last phase will be a years-long recovery from a few months of stoppage. “There’ll be less damage if we do something right now as a community,” Kinney said.
The enormity of the crisis has uncovered a glaring weakness in what had been a booming economy.
“A lot of businesses do not have reserves. They’re operating day to day,” Kinney said. “They might not even have reserves for their family or their personal life. It can happen in a day or a week.”
Kinney is asking for the state to release some of its federal resources to help small businesses, as well as seeking donors.
“We want to call on the state of Ohio and corporations and everyone else to understand how important local businesses are, to support them,” she said. “Everything that has happened in the last 10 15 years to build up our Ohio businesses could be lost if we don’t do something right now.”
Columbus Business First