Community LendingWorks: Supporting Oregon’s Small Businesses Through Loans and Grants

BY: Megan Loeb

• Associate Program Officer for Economic Vitality and Health

Economic repercussions of the COVID-19 pandemic have been swift. Nearly one-third of Oregon small businesses saw a 90% decline in revenue within the first month of the economic shutdown—and the decline was even steeper for women and minority-owned businesses, according to a recent survey issued by Business Oregon, Travel Oregon, and Oregon Small Business Development Center Network.

Maria Laura Ornelas, owner of Laura’s Day Care in Eugene, felt the reality of that decline firsthand. Ornelas has operated a home-based, child-care program since 2002. When stay-at-home orders were announced by Governor Brown in mid-March, she had to shut down for the first time in 18 years of operation.

“When COVID hit, I didn’t know what to do.” Ornelas says. “The first week, I tried to stay calm. The second week, I realized it was real. It was stressful. I had no unemployment money.”

When COVID shuttered her business in March, she reached out to Huerto de la Familia, a nonprofit focused on equity, leadership, and small business creation for the Latino community, to ask about resources. Alexandra Perez Urbina, Cambios program manager at Huerto de la Familia, introduced Maria Laura to Yvette Falcony, a loan officer with Community LendingWorks (CLW). Falcony connected Ornelas to CLW’s newly launched emergency loan program for small businesses.

During the loan process, the technical assistance Ornelas received from Falcony was crucial. “Yvette helped me a lot. She showed me how to complete the application,” Ornelas recalls. “It was very quick. In three days, I received notice that I was approved for an emergency loan.”

In the face of this crisis, CLW, a Community Development Financial Institution, has doubled down on its efforts to support Oregon’s small businesses—with help from two different Oregon Community Foundation programs: the Oregon Impact Fund and the Oregon Small Business Stabilization Fund of OCF.

As a recipient of a loan from Oregon Community Foundation’s Oregon Impact Fund, CLW specializes in consumer and business loans for those who have trouble accessing traditional bank financing. The Oregon Impact Fund was created with $10 million in committed capital from 24 OCF donors and a $10 million matching investment from OCF’s endowment, building on an earlier successful pilot project. The $750,000 loan, provided in February 2018, came at a time when both the organization and the economy were gaining traction, says Lynn Meyer, executive director of CLW. Within eight to 10 months, CLW was able to make about 20 loans using these funds to individuals and businesses, including a steakhouse in Springfield, a food cart and Latino market in Bend and a coffee shop in Albany.

Fast forward two years to a starkly different climate. In March 2020, COVID-19 arrived in Oregon and effectively shut down nearly every sector of the economy. “The impact was wide,” Meyer says. “From the food and beverage industry to retail to medical, no industry was immune.”

Fortunately, through creative partnerships and leveraging of funds, CLW was poised to help. They launched the first COVID emergency loan program in the state, which was seeded with $310,000 from OCF’s Small Business Stabilization Fund. CLW partnered with over a dozen communities statewide to leverage local funds and offer 100 emergency loans totaling $1.4 million to small businesses.

“It’s been the power of partnerships,” Meyer says, crediting the collaborative work underway. From Lincoln County to Prineville to Grant County, small businesses have received emergency loans to enable them to pivot and survive.

“Small businesses and startups are the leading providers of net new job creation,” says Melissa Freeman, director of strategic projects for OCF. Through loans and small grants provided by organizations like CLW, small businesses that do not have access to traditional financing from a bank are able to stay afloat. “The economic shut down due to the pandemic has shown that small businesses owned by women and people of color have been disproportionately impacted. It is critical to OCF’s mission to fund organizations that ensure all Oregonians have access to capital so they may create and retain jobs and improve Oregon’s economic vitality,” Freeman says.

Ornelas used the loan funds she received from CLW to pay her utilities and her mortgage, and to keep up with other bills related to her business. She reserved some of the loan funds to get her through the next few months. “It helped me a lot—more than I can say,” Ornelas recounts.

Part of OCF’s response to the impending economic downturn was to proactively waive interest payments for six-months for Oregon Impact Fund borrowers, including CLW. Subsequently, CLW was able to offer similar support to its borrowers.

“It was a blessing to have that interest holiday,” Meyer says. “It eased the cash flow concerns and enabled us to divert our energy to emergency support for these small businesses. It allowed us to step into the breach and assist.”

Notably, there has not been a loss yet in their lending portfolio. Meyer attributes this to the economic assistance provided and the ability of those businesses to adapt and diversify. “The early loans we facilitated enabled these businesses to recapitalize to buy equipment and pay for marketing efforts to pivot to new models of operation,” Meyer says. Restaurants revamped their business models to support to-go protocols and retail shops developed online shopping options.

Valuable lessons about equity were learned in the early days of the pandemic, when first-come, first-serve loan applications left many businesses at a disadvantage. Recognizing the inequity, CLW moved to a lottery system and made its application available in English and Spanish. In tandem, it continued to strengthen its partnerships with culturally specific organizations, such as Huerto de la Familia, for outreach and technical assistance.

Support by CLW staff (including Falcony, a bicultural, bilingual loan officer) is key to their model. “We don’t want to leave the small business owner who needs more technical assistance behind,” Meyer says. “We need our minority communities and our rural communities at the same table as everyone else when we’re talking about rebuilding.”

Going forward, Meyer recognizes the need for both traditional lending and flexible grants to allow for more fluid capital. “I firmly believe that how we lend capital in the next three or four years will look vastly different than how we lent it in the past,” Meyer says. “Traditionally, lending is based on assessing risk. But in these challenging times, we’re going to have to transition to a different set of optics.”

Even four months later, Ornelas’s revenue is still sharply down. “I used to have 10 children every day. Now, I only have two children on most days. It’s going to take a while to get back to normal,” Ornelas says. She remains hopeful that by September, she will have most of her prior clients back in her care.

By providing a variety of loan products and multiple tools, CLW feels well positioned to support the rebuilding phase for Oregon small businesses. “The entrepreneurial spirit in Oregon is strong and continues to emerge,” Meyer says. “We’re rebuilding communities one loan at a time.”

The Oregon Small Business Stabilization Fund of OCF was a collaborative effort among corporations, banks, the state, foundations and individual donors to raise and deploy $2.6 million to provide emergency grants and low/no interest loans to small businesses throughout Oregon.

OCF is in the process of expanding the Oregon Impact Fund to up to $30 million by 2021. The original $20 million will be deployed by the end of the year and there is plenty of demand for more of this type of capital. This fund is open to new contributions only from individuals who have advised funds at Oregon Community Foundation. Already an OCF donor? Contact your Donor Relations Officer for more information or to invest.

Photo: Contreras Family Farm, supported by Community LendingWorks through Huerto de la Familia.