When it’s time to launch a startup or a nonprofit, the first step the founder needs to take is to secure funding. Although donors and investors can play a major role in this aspect, founders often need a bank loan — and obtaining it can be a challenge, especially if they’re launching a small local business.

Big banks often struggle to provide flexible lending options, and this is where community banks can fill the gap in more ways than one. Community bankers, along with other local decision makers, possess a crucial ingredient to helping ensure a local company’s success: firsthand knowledge of the community, its sociocultural climate and its current needs.

Making connections

A loan in itself isn’t enough to launch a successful business or nonprofit. John Hill, SVP and director of Community & Business Banking at 1st Security Bank, sees his role as being a “connector” within the community by connecting clients with opportunities such as alternative non-bank lenders, as well as microfinance options when needed. For example, Hill says there are nonprofits that specialize in helping startups or small businesses get up and running, so he connects clients with the nonprofits that are the right fit.

The connections don’t stop there. Hill also refers startups and nonprofits to other local businesses that can provide assistance in multiple areas that are necessary for a successful launch. For example, these companies often need to work with the local U.S. Small Business Administration, and it’s also best if they partner with local insurance companies, local CPAs (certified public accountants), and local legal advisers who have expertise with business startups. By using these local resources, founders have the benefit of working with a team that has a clear understanding of the community and its needs. They can get straight to work rather than trying to get their team caught up on what’s currently happening in the community.

“As a community banker, you can offer all those connections to help that startup or small business make sure they’re starting the company in the correct way,” says Hill.

As part of the community, someone like Hill knows about resources that other people don’t. “One example in Seattle is Ventures,” he says. “They’ve got a business builder loan program there with up to $35,000 available to support startups and small businesses.” He also cites Rainier Valley Community Development Fund as an agency that helps businesses in their local community. “They’re not banks, so their lending isn’t the same risk as we’re looking at,” Hill explains. He adds that there are also local grant and government-backed options such as the Linked Deposit Loan Program through the Office of Minority & Women’s Business Enterprises. “There are lots of options out there,” he says, and locals like Hill who are involved in launching the startup or nonprofit have extensive knowledge of these resources because they live and work in the area where the company is being launched.

Shared goals for the community

Marc Cote serves as executive director of Parkview Services, a nonprofit dedicated to securing affordable housing for people with intellectual and developmental disabilities. Cote, who works with 1st Security Bank, says it’s crucial that they collaborate with individuals who understand and support what the nonprofit is trying to accomplish. And, due to the massive changes in the greater Seattle area’s housing market over the past decade, having locals who have witnessed this firsthand is key.

“We live in these communities and we’re invested in these local communities,” says Hill. “We live our core values and we try to match those core values with the companies and nonprofits that we’re working with.”

For example, Hill serves as a volunteer on a local board that supports inclusive housing solutions and offers home ownership counseling services. This match in core values, along with Hill’s knowledge on the issue of inclusive housing and the connections he’s made through his volunteer work, are assets when he’s providing advice and resources to Parkview Services.

Problem solving

Effective problem-solving skills are crucial to running a successful business. Cote says that a decade ago, Parkview hit a rough patch and didn’t develop many homes between 2009 and 2012. One of his goals was to create more housing for the population the nonprofit serves due to the major (and rapidly increasing) need.

“The board suggested waiting to get public funds before we develop, but that was a really slow process,” Cote explains. “So I finally got the board’s permission to take out loans to purchase.” Under this new model, Parkview can purchase property and then, after doing some pre-development work, apply for public funds. “By purchasing the property up front, now I can house the population right away even though I’ll need to do some rehab when I get the public funds,” Cote explains.

The first house Parkview bought under this new model was in 2018 and came about through community connections. “A church reached out to us. They were already housing people with developmental disabilities, but they weren’t interested in keeping that house,” Cote says. “But they wanted to sell it to an organization that was committed to the work of housing people with disabilities, so they sold it to me for $250,000 below market value.”

Having the support of a local lender helped Cote and his team identify the challenges, sort through potential solutions and find the one that best suited local conditions.

At 1st Security Bank, we know your money is more than a number. It’s the path to a better life, business, and community. We call your neighborhood home, and we’re dedicated to making it a better place to be.