California entrepreneurs in low-income areas can tap into $10 million in small-business loans thanks to a new program by Opportunity Fund and Lending Club.
The two companies have partnered to make small-business loans available in “underserved areas” in California, helping roughly 400 businesses and creating about 1,000 jobs, they announced Monday.
Opportunity Fund, a nonprofit small-business loans company, and Lending Club, a small-business lending platform, are in the process of identifying specific communities where the program will be focused.
‘A breakthrough collaboration’
Eric Weaver, Opportunity Fund’s founder and chief executive officer, says the initiative will be geared toward communities with a high proportion of low- and middle-income residents, such as neighborhoods in south and central Los Angeles and parts of Oakland.
“Our very mission is to advance the economic well-being of working people,” he tells NerdWallet.
In a statement, Weaver called the program “a breakthrough collaboration.”
“We’ve been lending in disadvantaged communities for 20 years,” Weaver said. “The plan for this partnership is to allow us to reach many more underserved businesses by developing a first-of-its-kind technology integration with Lending Club.”
The new program also addresses the need for small-business loans that became more pronounced in the wake of the 2008 financial crisis.
Opportunity Fund and Lending Club, citing FDIC data, said that although bank commercial loans of $1 million or more rose by 47% from 2007 to 2014, loans of $100,000 or less slipped by 9%.
“What we’re seeing is that banks pulled out of the market almost entirely with the financial crisis, and small-business lending has not recovered,” Weaver tells NerdWallet.
More attention from alternative lenders
The decrease in small-business loans and other forms of financing also has prompted alternative lenders to focus more attention on that segment of the market.
For example, Lending Club recently unveiled a partnership with Score, the nonprofit association that helps small businesses get started. Lending Club also unwrapped a partnership with the U.S. Women’s Chamber of Commerce in an initiative geared to women who own businesses.
In a statement, Lending Club CEO Renaud Laplanche said the new program with Opportunity Fund aims to “make our technology available to Opportunity Fund to help them scale further” and “to meet the needs of a greater number of small business owners.”
Former President Bill Clinton, who announced the Opportunity Fund small-business loans program at a Clinton Global Initiative America event, said in a statement, “Access to capital for entrepreneurs is key to restoring real economic mobility, job creation and the economic health of the middle class.”
To help you compare loan options, NerdWallet has come up with a list of small-business loans. We gauged lender trustworthiness and user experience, among other factors, and arranged them by categories that include your revenue and how long you’ve been in business.
To get more information about funding options and compare them for your small business, visit NerdWallet’s best business loans page. For free, personalized answers to questions about financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.
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