DENVER – In a climate where many small businesses struggle to secure funding, Nonprofit Colorado Enterprise Fund (CEF) is supporting underserved entrepreneurs.
“The Colorado Enterprise Fund was established in 1976, and since that time, we've been helping underserved businesses with access to capital, as well as consulting,” said Alan Ramirez, director of lending at CEF. “For us, an underserved business is really anyone that’s gone to a bank and cannot qualify. So, really focused on that market to help them start and grow their businesses.”
CEF is a community development financial institution (CDFI). They are federally-mandated to supply loans that are focused on helping the community. A CDFI can be a great place to turn to for a business that has been denied a traditional bank loan.
Many entrepreneurs look elsewhere for a loan, and they can end up paying a steep price.
“In this market over the last few years, what we're seeing is that businesses have been struggling with their cash flows, and so for these customers, sometimes they fall prey to fast money,” said Ramirez. “What ends up happening is that they get fast money, but the customer is now having to pay a percentage of each transaction per day, and so that can obviously accumulate.”
Rivers and Roads Coffee is an example of a thriving business that was hampered by a predatory loan. It has found a successful niche in Denver’s City Park neighborhood by combining a completely gluten-free menu with an open community space.
Still, co-owner Michael Keen was forced to look for a loan in the tough Denver restaurant industry after COVID.
“I'd been in the restaurant world for about 25 years. I opened some 40-plus restaurants for other people,” said Keen. “I owned a previously successful group myself, and still couldn't get a bank loan to launch the business because they just said, ‘Oh, it's too high risk.’”
Keen ended up getting a short-term loan. He got the money quickly, but it became difficult to pay off. The payments were too high, so he teamed up with CEF to find a solution. They restructured his loan so that he could pay it off in a reasonable amount of time, rather than the 10 months he was allotted for the previous loan.
“By saving them this money, stretching out those terms, and reducing the interest rate, they're in a much better position to continue to grow and operate that company,” said Ramirez. “It’s interesting the amount of debt consolidation loans that we're seeing in these last few years and even more interesting, the amount of money that we're saving these business owners as well.”
CEF also helps their clients by providing support throughout the length of the loan. It’s in the best interest of the company, as well as CEF, for them to be as prepared as possible.
“There's so much to learn in operating a business, and so for them to have that sound board, that guidance to be able to hopefully put them in a better position to operate that business,” said Ramirez. “It's definitely a win-win for everyone.”
Ramirez says if you run a small business and you’re looking for a loan, make sure that you take the time to do your research, and to really think about taking a short-term loan that sounds too good to be true.
“Fast money could be expensive money,” said Ramirez. “I think as a business owner, if you’re applying today and getting that loan that same day or tomorrow, there’s going to be a price on that.”
He also recommends contacting CEF or another CDFI to go over your business plan, and see if they can give you a fair loan.
“CDFI’s are a great resource for small businesses,” said Ramirez. “A 20 minute call could really save a business owner a lot of time and money.”
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