Purpose

People, Inc. developed People Incorporated Financial Services to provide training, technical assistance and business loans to new and existing small businesses.  A tourism development loan fund is managed for the Ninth District Development Financing Incorporated.

Description

People, Inc. established People Incorporated Financial Services to promote the economic self-sufficiency and a better quality of life for the citizens of the region through small business ownership, job creation, and asset development.  It is a Microenterprise Intermediary Lending Program established through Small Business Administration (SBA) funding.  The SBA website lists other SBA Intermediary lending programs throughout the United States, along with other useful information on their various loan products and information pertaining to starting or expanding a business.  There is also information available on grants under the PRIME Program to assist with providing technical assistance to prospective low-income entrepreneurs.  People Inc. is a PRIME participant through the SBA and is also funded by the Virginia Department of Housing and Community Development and the Virginia Tobacco Indemnification and Revitalization Commission.

People Incorporated Financial Services has operated as a program of People Inc. for the past 14 years.  In 2004, the program will be transferred to a separate entity with its own by-laws (the Southwest Virginia Community Development Financing, Inc.) that is an affiliate of People Inc. and was formed to obtain certification as a Community Development Financial Institution (CDFI) under the U.S. Department of Treasury.  CDFI's are intended to expand the availability of credit, investment capital and financial services in distressed urban and rural communities.  People Inc. is a member of the Southwest Virginia CDFI and appoints the CDFI Board.  People Inc. provides administrative services to the CDFI through a contractual agreement.

Capacity building is an essential element to foster business success.  As such, People Inc Financial Services offers five training courses to help individuals understand what is involved in running a business and how to obtain financing.  The courses are conducted as group sessions and are recommended for all start-up businesses defined as less than 12-months in operation.  Two of the courses are single 3-hour sessions for $10 each designed to help entrepreneurs gauge their business readiness (Do You Have What It Takes? and Making Your Business "Loan-Ready").  The third course is conducted over four 3-hour sessions for $65 (optional material fee) structured to teach entrepreneurs how to develop a business plan using CoreFour® Business Planning.  The fourth workshop is Customer Service Training, delivers a powerful message about taking care of customers and focusing on service, attitude, consistency, and teamwork.  The fifth workshop is Social Media, how free tools can be used for promoting business and demonstrates how you can harness the marketing power for your business. Training is also offered in Personal Finance Management through a self-study course developed by the Virginia Cooperative Extension office called  Managing Your Money.

People Incorporated Financial Services is a lender who finances both start-ups and expansions that might not be eligible for bank financing.  Whenever possible, referrals are made to conventional lending institutions and People Incorporated Financial Services receives credit from SBA for these bank-facilitated loans.  Every business is different and there are many variables that contribute to success.  Clients are advised to be prepared for an extensive period of time before they may even breakeven.  In general, a 3-year period is suggested before breakeven:

• Year One - Entrepreneurs are learning "How to Be in Business"
• Year Two - Focus on "Growing and Building Your Customer Base"
• Year Three - Focus on "Profitability and Efficiency"

Clients who are currently employed or who have other sources of household income are good candidates to create and grow businesses that eventually can be self-sustaining and could generate enough income to achieve full-time operations.

One-to-one technical assistance through a Request for Services contract is provided to existing businesses and only to start-ups who take the training courses.  Business Start-Up Guides published by the Entrepreneur Group are available from the BusinesStart lending library and may be checked out for a deposit of $75.

A number of Business Tools are provided such as:

• Writing a Business Plan
  • Sample Business Plans
  • SBA Small Business Planner
• Templates
  • Financial Statement
  • Balance Sheet
  • Cash Flow
  • Startup Expenses
• Download QuickBooks Simple Start Free Edition

FAQs and an Overview of the Loan Program is accompanied by fact sheets with additional details for persons interested in either Entrepreneur Loans or Business Expansion Loans.  The maximum loans provided through People Incorporated Financial Services are $35,000 for Entrepreneur Loans and $200,000 for Business Expansion Loans.  An internal credit committee meets weekly with authority to approve loans up to $10,000.  A Loan Application is available on-line.

Community Action Agencies could begin involvement with microenterprise lending in the form of a trial period or demonstration through Community Development Block Grant funding or private bank financing.  Funding for technical assistance is available through the U.S. Department of Treasury.  The Association for Enterprise Opportunity (AEO) is an important source of information and resources for microenterprise development.

People Inc. Financial Services is staffed by the Director of Community and Economic Development, a Senior Credit Manager, a Business Training Manager/Marketing Coordinator, and four Business Development Managers..

People Inc. has additional avenues for tourism loans through the Ninth District Development Financing Inc. (for tourism-related ventures) with $4.1 million total dollars lent out since inception.

The newest program is New Markets Tax Credits, this program attracts private investment to community development projects in low income communities by offering tax credits to investors in return for qualified equity investments.  The investment funds are used by People Incorporated, a certified Community Development Entity, to make loans to high impact businesses that create jobs and build opportunities and economic growth in low-income communities.

Outcomes

2009 Economic Impacts in Southwest Virginia

People Incorporated Financial Services provides access to services to:

• 399,318 population of Southwest Virginia, covering 19 counties and 3 cities, or 6,000 sq miles.

• Since its inception in 1992, People Incorporated Financial Services loan portfolio has grown to consist of 408 microenterprise and business loans, resulting in the creation of 689 jobs and the retention of 435 jobs.
• In the last year, 618 clients attended training in Core Four®, Business Basics classes, Customer Service Workshops and/or received technical assistance sessions to assist with their small businesses.
• In fiscal year 2009, People Incorporated Financial Services closed 65 loans and approved $1,880,615.49. 49 new businesses were started, 16 businesses were expanded. Of the 65 loans made, 49% were provided to low income clients.