Banks team up to provide loans for small businesses

Wes Franklin

A business owner wants to renovate his building. Projected expense is $30,000. He has $5,000 of his own to put down. But the bank will only loan him $20,000 for the project. How does he come up with the remaining $5,000?

If the business were within Neosho’s DREAM area, more likely than not, there would be a ready solution.

And it’s called DREAM Capital Corporation.

Area bank executives met Thursday in Neosho to kick off the organization, a for-profit private sector alliance between seven local banks that provides gap financing, as illustrated above, for small entrepreneurs.

Only businesses or future businesses located within Neosho’s DREAM Initiative area — a triangular district based around the downtown Square — are eligible to apply. Business loans will range from $5,000 to $50,000 to assist borrowers with down payments when either acquiring an existing business, upgrading an existing one, and anything that otherwise develops or improves their business.

Brian Fogle, vice president of community development for Great Southern Bank, said the interest rates should be below market as an incentive to borrowers, and suggested a target low interest fee. Fogle said also said that of the hard fast credit rules, those on collateral could be relaxed a bit.

“What we have to remind ourselves, is that we’re not the bank,” he said later. “We need to be more lenient and flexible than a bank can be.”

Clifford Wert, regional president of U.S. Bank, agreed, but said interest rates should be on a case-by-case basis rather than set in stone.

“It’s a discussion of what is reasonable — not necessarily giving away the store but not exorbitant either,” he said.

Each of the participating banks, listed separately in this article, bought shares in the DREAM Capital Corporation. Start-up funds total $250,000.

According to Fogle, it will usually be the banks themselves who act as middleman in bringing forward gap financing loan requests to the corporation.

Fogle is involved in similar lending coalitions around the region. DREAM Capital Corp was largely modeled after like multi-bank entities in Joplin and Springfield.

He also told the group not to expect too many loan applications, especially at the beginning, but said personnel at the participating banks should be reminded to keep the Corporation in mind, to use when applicable.

Even so, Fogle said the 10-county Ozark Regional Community Development Corporation has only processed three or four loans in the past two years. Likewise, the Springfield Finance and Development Corporation receives and approves the same number in about a year.

“Not a whole bunch, but important dollars,” he said. “Those are three or four businesses that wouldn’t be there otherwise.”

Neosho Daily News