A nonprofit community lender is looking to increase its presence in Fairfield County.
Community Economic Development Fund (CEDF) has been lending capital to small businesses and homeowners in distressed Connecticut neighborhoods since 1994. But only a small proportion of the group”™s loans have historically gone to Fairfield County, said Donna Wertenbach, CEDF”™s CEO.
“We had more difficulty reaching them there and I can”™t really tell you why that”™s true,” Wertenbach said. Yet through strengthening partnership with the Business Council of Fairfield County and others, the fund hopes to change that.
Based in Meriden, CEDF is an alternative lender that works with customers who typically aren”™t eligible for bank financing.
Usually the loans are seen as risky investments, whether it”™s because the borrowers have low credit scores or not enough collateral. However, by building a lending model that is more flexible and provides more one-on-one counseling and training, the fund has found a higher success rate than traditional banks, Wertenbach said. In 2012 the CEDF lent $13 million to 116 clients statewide.
“Just providing loans that you would get at a bank is not the right model,” she said. “We provide a holistic approach.”
The fund provides business skill classes for their clients on how to manage cash flow, assess risk and track finances. But they also offer the same classes to the general public. Already, the fund offers classes in Bridgeport and Norwalk. In general, only businesses in urban areas are eligible for CEDF financing, which in Fairfield County includes Stamford, Norwalk, Danbury, Bridgeport and Stratford.
The Business Council recently caught the “CEDF fever” since increasing the council”™s role in the state”™s Small Business Development Center, said Keith Reynolds, a Business Council program director. The council hopes to increase awareness of CEDF”™s programs throughout the county and help restore the CEDF”™s historically more active partnership with the SBDC.
“They”™re a great organization we”™re really excited about,” Reynolds said. “We”™d like to do more to bring them to Fairfield County.”
Riding out the recession, the CEDF more than doubled its outreach in the state as banks started to withdraw from the credit scene, Wertenbach said. Before the economic slowdown, the fund averaged $3 million in loans annually. But as more businesses struggled to find lending to support themselves, the fund found ways to increase its presence.
The majority of CEDF”™s funding comes from investments from roughly 20 private banks, both small and large.
As the economy picks up, Wertenbach said she”™s seen an increase in lending activity from banks, but said she doesn”™t anticipate the CEDF slowing down anytime soon.
“It”™s going to take quite awhile for the economy to turn around until we are lending less,” she said. “There still are a lot of businesses that are overleveraged and looking for new markets. This all takes time. I think there will be a new niche for organizations like ours by the end of it.”
