As an entrepreneur or small-business owner, finding money to grow your business is hard, and looking for a small-business loan is often a lonely and confusing search.
Luckily, there are organizations in New Mexico whose goal is to support these people as they develop and expand their businesses.
One such organization is Three Sisters Kitchen, which was founded as a direct response to small, local farmers and food entrepreneurs asking for training and commercial kitchen space to experiment, test, and develop food businesses in an accessible location. Three Sisters director, Anzia Bennett, got wind of these challenges, and helped them by creating a culinary-friendly space and a unique loan option – Nusenda Credit Union’s Co-op Capital program, which works with community organizations to vet and set loan terms for businesses in their networks.
The challenges these farmers and aspiring food entrepreneurs face in their search are not unique. Co-op Capital is a program that was borne out of many months of listening to the challenges that small-business owners in Albuquerque commonly faced when trying to secure loans – they didn’t perform well on traditional criteria for creditworthiness or didn’t have business models that the lenders understood. As a result, they were offered packages with limited financing and challenging rates and repayment terms, or they had their loan requests outright declined. Nusenda recognized this barrier to access is a critical hurdle for Albuquerque as it builds its local economy. To try and address this, Co-op Capital decided to turn the question of “Who deserves a loan?” on its head.
Nusenda saw and heard stories of businesses both in Albuquerque and around the state that were stagnant because they’re not able to access capital. So in designing the Co-op Capital program, the credit union’s approach was to leverage its relationships with existing partners to create an option that redefines who deserves a loan, and for what purpose.
Through the Co-op Capital program, Nusenda works with trusted organizations like Three Sisters that already bank with the credit union and can serve as a trusted connector between funding and the small businesses in its network. Each “connector” organization works with Nusenda to develop its own loan evaluation criteria and set loan terms, and then uses their depository accounts to guarantee loans made to small businesses in their networks.
Three Sisters plans to offer Co-op Capital loans to graduates of their Food Business Training Program who will have received a variety of training in ways to bring their products and businesses to market successfully. All involved have a strong incentive to set terms that are fair and reasonable. These business owners and entrepreneurs are part of the Three Sisters community, and helping businesses grow is part of the Three Sisters mission. There are incentives to repay the loan because they rely on the Three Sisters network for customers and relationships as well as business advice.
Community and networks have proven to be powerful collateral. Co-op Capital had a humble start as a pilot program in 2012, and since then it has made more than $600,000 in loans to nearly 300 entrepreneurs, with a delinquency rate of only 1 percent, significantly outperforming the national average.
“As we open our doors, we are so excited to be offering Co-op Capital as a wraparound service to our training program graduates,” Bennett says. “These loans address the issues of access and equity by providing opportunities for our graduates to thrive in the food industry that otherwise would not be available to them.”
Thanks to support from the W.K. Kellogg Foundation, this year the Co-op Capital program expanded to include 10 new affiliate organizations, including Three Sisters, the South Valley Economic Development Center, Family Independence and the Street Food Institute. These partner organizations will support city-wide goals for entrepreneurship, economic development, and family financial mobility.
With so many success stories from the past few years, Nusenda Credit Union is excited to explore how the Co-op Capital model can help a wider range of small business owners pursue their goals in New Mexico.