Great reply Sheila , having just recently completing a Master's Degree in Community Economic Development, it is painful sometimes to read some of the posts on this list and recognize that some people don't have a clue as to what a Community Development Corporation is. There are many factors that go into the decision to finance small businesses. Track record, personal finances, education,type of business, and equity, all play an important role. But these are not all, "Race and ethnicity" also play a large role, and some small business owners , particularily persons of color have a very difficult time obtaining financing to provide goods and services to their communities. This is a fact that some of us are not comfortable discussing, but it does exist. In fact many minority business owners go out of business simply because their venture was/is undercapitalized. Subprime lending , on the other hand is almost 95% related to low-income communities, where people cannot obtain financing for housing, cars or other necessity items , like furniture. Then a for-profit lender offers to make a loan that no other lender is willing to take , and they charge extra high interest rates because these people are in a catch - 22. The rates are so high that you usually end up paying 3-4 times the value of whatever was purchased.Usually sub-prime lenders won't even touch a commercial loan , because it is not apart of their business model, they target indivauls looking to purchase homes, etc.
-----Original Message----- From: Sheila Delaney [mailto:[EMAIL PROTECTED]] Sent: Thursday, December 26, 2002 2:15 PM To: [EMAIL PROTECTED] Subject: Re: [Mpls] MCDA small business loans Actually, I know of several neighborhood restaurants that will be opening soon. Some of them accessed MCDA small business loans another obtained a small amount of financing from a Community Development Corporation ( Seward Redesign.) I know for a fact that these restaurant owners have outstanding credit, great business plans and substantial equity into their businesses. The additional financing obtained from the MCDA and the CDC was just the extra gap financing that they needed to open. I imagine that most people on this list are in favor of local businesses populating neighborhood commercial nodes. The MCDA and other CDC lenders play an important role in making a truly local economy possible. This type of gap financing is community development, not "sub-prime lending." Sheila Delaney Lyndale, Ward 10 >From: Terrell Brown <[EMAIL PROTECTED]> >Reply-To: [EMAIL PROTECTED] >To: Minneapolis Issues List <[EMAIL PROTECTED]> >Subject: [Mpls] MCDA small business loans >Date: Thu, 26 Dec 2002 11:17:30 -0800 (PST) > >-----Original Message----- >From: Iric Nathanson > >In a recent posting, Michael Hohmann maintains that MCDA small business >loan programs are a form of "subprime" lending that uses tax dollars to >complete with commercial subprime lenders. > >In fact, the MCDA programs do not constitute subprime lending. Rather, >they provide capital access for neighborhood-based small businesses >that may lack an established track record or a large enough down >payment to obtain the financing they need. > > >[TB] Give me a break. That is exactly what sub-prime lending is. It >is lending money to those who are not able to obtain money thru sources >that require better credit worthiness. Established track records and >larger down payments make a borrower more credit worthy in the eyes of >most lenders. > >Me thinks Michael had it exactly right. > > > >Terrell Brown >Loring Park >terrell at terrellbrown dot org > >__________________________________________________ >Do you Yahoo!? >Yahoo! Mail Plus - Powerful. Affordable. Sign up now. >http://mailplus.yahoo.com >_______________________________________ > >Minneapolis Issues Forum - A City-focused Civic Discussion - Mn E-Democracy >Post messages to: mailto:[EMAIL PROTECTED] >Subscribe, Unsubscribe, Digest, and more: http://e-democracy.org/mpls _________________________________________________________________ STOP MORE SPAM with the new MSN 8 and get 3 months FREE*. http://join.msn.com/?page=features/junkmail&xAPID=42&PS=47575&PI=7324&DI=7474&SU= http://www.hotmail.msn.com/cgi-bin/getmsg&HL=1216hotmailtaglines_stopmorespam_3mf _______________________________________ Minneapolis Issues Forum - A City-focused Civic Discussion - Mn E-Democracy Post messages to: mailto:[EMAIL PROTECTED] Subscribe, Unsubscribe, Digest, and more: http://e-democracy.org/mpls _______________________________________ Minneapolis Issues Forum - A City-focused Civic Discussion - Mn E-Democracy Post messages to: mailto:[EMAIL PROTECTED] Subscribe, Unsubscribe, Digest, and more: http://e-democracy.org/mpls
