First state loans provide some opportunity

By John Denny
Staff Reporter

Two and half years ago, New Castle County resident Robert Hensley made a life-changing decision to go into business for himself. He had 10 years of landscaping experience, was tired of working for someone else and was looking for a loan. The problem was banks wouldn’t lend him any money.

His credit was ruined after filing for bankruptcy over a credit card debt, which caused him three loan denials. Finally, down on his luck and almost out of hope, Hensley found the answer to all his prayers — the First State Community Loan Fund (FSCLF).

He started off with one pickup truck, but the loan from First State enabled him to buy a heavy tow truck.

“It was truly a blessing from God,” Hensley said. “I needed another truck and to get noticed in this business you have to have big equipment.”

He now is the proud owner of a fleet of work trucks and equipment, including four pickups, one heavy truck, three bobcats (one more on the way), a seed renovator (aerator) and a hydro-seeder, along with being boss to 17 employees.

FSCLF is a not-for-profit Community Development Financial Institution (CDFI) that specializes in providing financial support to small businesses and developers of affordable housing throughout the state of Delaware. The FSCLF prides itself on marketing itself to women and minority-owned small business owners who may not qualify for a bank loan.

The FSCLF works primarily in New Castle County but is taking the steps to offer their services to interested entrepreneurs in Kent and Sussex counties as well.

“Part of the challenge is getting the word out,” FSCLF Executive Director Van Hampton said. “People don’t know about us. They don’t know we’re here. At some point we need to open an office downstate.”

The FSCLF made 38 loans last year, totaling $2.8 million — up 33 percent from 2004. But only a fraction of that was used in Sussex County. Only $190,000 of all dollars lent went to Sussex County businesses, compared to nearly $2.3 million invested in New Castle County alone.

The FSCLF loans entrepreneurs up to $50,000 or as little as $300, which makes it convenient for the borrower because it isn’t profitable to for a bank to lend such a small amount of money, even though it’s vital to the business.

Hampton met with Delaware bankers to encourage them to refer potential borrowers who are denied bank loans to First State instead. Since First State is non-profit, the loan fund has less stringent standards for collateral and credit history.

Before First State will bless them with a check, interested entrepreneurs need a vision, but first and foremost they need a business plan. Interested borrowers can set up a business plan at the Delaware Small Business Development Center or the Service Corps of Retired Executives.

Hensley said the Department of Agriculture was helpful to him, and he had the money he needed only a month later.

Though the FSCLF standards are less strict than a bank, they do need some insurance on a return. Tangible business assets, real estate, personal or third-party guarantee, or any other assets are acceptable forms of collateral.

Interest rates range from 8.5 percent to 12.99 percent annually.

As part of the FSCLF’s endeavors in to the southern part of Delaware, FSCLF marketing consultant Harold Stafford met with the Frankford Town Council in February to present his company’s services to the town and the county.