LISC small business loan fund makes first foray into Phoenix, helps local firm create jobs in distressed area
18 Oct 2012
PHOENIX (October 18, 2012)—The Local Initiatives Support Corporation (LISC) is helping a Phoenix business refinance its debt so it can expand its operation and add jobs in a neighborhood recovering from economic decline.
It’s the first loan made here through LISC’s new Small Business Fund. Capitalized by Morgan Stanley, the fund utilizes LISC New Markets Tax Credits and pairs them with Small Business Administration loans to help fill the gap left by the tight credit market. The fund targets small businesses in communities where poverty and blight have long discouraged commercial investment.
In this case, that means refinancing an outstanding loan for Specialized Services Company, a family-owned underground utility contractor based in the North Phoenix neighborhood. The $453,000 refinancing package reduces the firm’s interest rate, increases its cash flow and supports its plan to expand its 28-person staff by as much as 25 percent.
“We know the construction recession in Arizona is not over, and there are signs it could continue until 2015,” said Marcia Veidmark, president of Specialized Services. “This refinancing is an important tool to help us operate tightly and smartly to weather the ongoing challenges and still pursue our strategic plan for growth.”
Specialized Services will use the additional capital to help replace aging equipment and bring on new staff to operate it. “Over the last few years, we’ve known that some of our equipment has become tired. But we’ve been reluctant to make major purchases given the economic environment. This additional capital makes it possible.”
“Some people hear ‘refi’ and think that this is just another run-of-the-mill financial transaction,” noted Kevin Boes, president of New Markets Support Company, a LISC affiliate that manages the fund. “But we look at it differently. This is a job creation program as important as any other. It reinforces the company’s sound financial footing and frees up capital so it can hire additional staff. There is nothing run-of-the-mill about that.”
LISC is a national nonprofit with 31 local urban programs—including LISC Phoenix—working to help troubled low-income neighborhoods become good places to live, work, do business and raise families.
Teresa Brice, executive director of LISC Phoenix, called the Small Business Fund an important addition to LISC’s revitalization toolkit. “Healthy neighborhoods need good jobs and growing businesses,” she said. “In part, that means attracting new companies and engaging fledgling entrepreneurs. But, it also means supporting existing companies that are firmly rooted in the communities where they operate. When they flourish and expand, the whole community benefits. Specialized Services, with its more than 40-year history in Sunnyslope, surely fits that description. “
For the last few years, LISC Phoenix has been helping drive commercial revitalization in Sunnyslope in partnership with Desert Mission Neighborhood Renewal, one of the most successful nonprofit community groups in Phoenix. That includes supporting work to attract and retain businesses along the Hatcher Road commercial corridor as well boost the adjacent light industrial district.
“Small businesses in the communities where we work are often ready to expand, but they can’t access the capital they need to do so,” said Brice. “That’s what LISC does. We step in where the private market can’t, build a track record of successful lending and lay the groundwork for new private investment in once-troubled places. It’s a model that works all over the country. And it is working here in Phoenix as well.”
LISC Phoenix is celebrating its 20th anniversary this year, having invested $181 million in housing, businesses, schools, recreational facilities and more across the Valley since 1992.
LISC combines corporate, government and philanthropic resources to help nonprofit community development corporations revitalize distressed neighborhoods. Since 1980, LISC has raised $12 billion to build or rehab 289,000 affordable homes and develop 46 million square feet of retail, community and educational space nationwide. Since 1994, LISC support has leveraged nearly $40 billion in total development activity. For more information, visit www.lisc.org.
New Markets Support Company (NMSC), an affiliate of LISC, drives commercial development in economically distressed neighborhoods across the country. NMSC oversees LISC’s $778 million federal New Markets Tax Credit allocation—the largest in the country—and also syndicates and manages New Markets Tax Credit investments on behalf of other organizations. In connecting businesses to much-needed capital, NMSC supports new and expanding shopping centers, office buildings, manufacturing facilities, charter schools, community health centers and recreational facilities in communities with high poverty and significant unemployment. New Markets investments are part of a broad-based strategy to raise standards of living in low-income areas. For more information, visit www.newmarkets.org.
Article Type: News