True Access Capital moves forward after rebranding
Earlier this year, the First State Community Loan Fund took a hard look at itself and decided to rebrand. That process, conducted with NuPOINT Marketing, found:
- Products and services were not linked to the brand; rather they grew up around the brand.
- There was no cohesive, singular brand message.
- Their Women’s Business Center brand often outshone the First State Community Loan Fund brand.
- Their brand limited the geographic footprint, and they had minimal brand awareness in Kent and Sussex counties and Pennsylvania.
From that analysis came the new brand, True Access Capital.
“I initially started thinking about rebranding because we were going into southeastern Pennsylvania, says True Access President and CEO Vandell (Van) Hampton Jr. “The First State name was really relevant to Delaware. But I started to realize that was much more than just the name. It was how the organization is actually presenting itself to the public.
Hampton oversees a community development financial institution (CDFI) that “provides access to capital and technical assistance to small businesses. We serve the state of Delaware and southeastern Pennsylvania, and we typically work with businesses who wouldn’t be able to go to a traditional bank for financing. We say we serve underserved populations, which means we’re mostly talking about women and minority-led companies and low-income individuals.”
The organization has been lending in Delaware for 27 years but decided in 2012 to start lending in Chester and Delaware counties in Pennsylvania. Hampton says they then saw an opportunity to move deeper into southeastern Pennsylvania, Bucks, Montgomery and Philadelphia counties.
“We knew that if we were going to make that leap, we really needed to present ourselves in such a way that folks knew who we are. This wasn’t something that we took lightly. We had a lot of stock and brand recognition in First State Community Loan Fund, particularly in Delaware. I think the biggest hurdle we had to overcome was that people did not want to lose that brand identity that we had already established.”
Hampton says he thought it was going to be tougher to convince his board that they should move forward with the rebranding. “They all want to see the organization succeed, they want to see us grow, they want to see us fulfill our mission, and they realized this rebranding just made sense.”
The organization’s products and services now fit under the True Access Capital umbrella as:
- Loan Products
- Community Initiatives
- Training and Education, which includes the Women’s Business Center
Hampton sat down with Delaware Business Times to talk about True Access Capital’s future. The interview has been edited for length and clarity.
How important is your designation by the Department of Treasury as a CDFI?
Very important. Sixty percent of our lending and technical systems activity has to be directed towards this underserved population. There are about a thousand CDFIs in the country, and each one decides what they’re going to do. We do small business; there are CDFIs that do affordable housing. There are some that do health facilities and some that fund charter schools. A big part of being a CDFI is accountability to the community. We need to make a difference creating jobs and building wealth for communities that really need it the most.
Has your elevator speech changed much as True Access vs. First State Community Development Fund?
If you hear First State Community Loan Fund, it’s like what is that? Do you lend? Can I borrow money to buy a house? At the end of the day we’re a loan fund and you get True Access through the actual loan product that you do and through the training you need to be ready to borrow, and through our community initiatives to take our products and services directly to the community.
The riskier borrowers that we deal with are typically people of color who don’t have wealth and assets in their community, so they could never go to a bank and borrow the money. They don’t have the 10 or 20% (down payment); they may have credit issues. Our loan-to-value ratios are much higher than if you go to a bank. We’re taking a lot more risk. They’re not third-generation business owners, so a lot of those things that you might learn at the dinner table because your father and your grandfather owned the business, they don’t see, so we’ve got to bring these things to the table.
As you started to set your goals for 2019 before beginning your rebranding efforts, what did that look like?
We wanted to grow our portfolio and expand into Southeastern Pennsylvania. There were some capacity-building things that we needed to do. And we’re now measuring things like job creation and number of loans. Those are the easy things to measure. We also wrote a capitalization strategy because we need to raise $1 million a year, and that’s about $600,000 a year more than what we currently raise.
We raise money in four areas — with banks through CRA lending, through the federal and state government, and with individuals. The biggest area that we weren’t touching was charitable foundations. So that’s where we decided to concentrate our efforts.
Now that you’ve gone through the rebranding process, have you raised the bar on your goals?
We’re coming off a banner year. Last year, we did 37 loans for a little over $4 million. That’s the best year we’ve ever had. So we came off it very excited, set some really lofty goals. We’re actually a little behind where we need to be on the lending side. But we’re getting other stuff done. The capitalization strategy is moving along like it’s supposed to.
Are you a financial institution or a nonprofit?
We grapple with that. We’re both. We’ve got a mission to serve underserved populations. But we’re also a financial institution. Sometimes they butt heads. This goes back to the First State Community Loan Fund Name. We walk in, we’re talking to banks and they say, “Oh you guys get all your money from the federal government and you don’t have to really work hard.”
We expect folks to be paid back. We’ve borrowed [more than] 80% of the money that we lend. So we have to pay somebody back. But folks don’t look at us that way. They don’t look at us sometimes as a real financial institution. That’s really part of why this rebranding was important as well, because I don’t think that First State Community Loan Fund really spoke to that.
I’ve been working in this field 20-plus years. There are still a lot of people who don’t really know what a CDFI is. We end up being great partners for banks because as they have deals that they can’t do, they can refer them to us. My pitch typically to them is, “Look, you got a client that has deposits with the bank. You can’t do the deal for whatever reason. You refer it to us. One, we’ll be able to do the deal. Two, we’ll provide some support to this individual. And you keep them as a customer. If you refer them to another bank, you’re going to lose the deposits and everything else.”
About 75% of your current portfolio is in New Castle County, and Kent and Sussex loans bring that up to 82%. What do you see as the ideal mix?
I think our growth is probably going to be is in southeastern Pennsylvania, particularly Philadelphia. We’ll do some in Bucks, and some in Montgomery. Delaware’s our base, and I could easily see us at 60/40 with Delaware having the larger share. Delaware’s our base. It’s where most of these community relationships exist. We are always going to have a heavy presence here. But we think there’s going to be some opportunity in Philadelphia to serve folks who need it.
What strengths does your organization bring to the table? What do you need to shore up?
We do a really good job at lending to small businesses. Not so much early stage, but small businesses who have been around a couple of years, making a couple of hundred thousand dollars in revenue and need that cash to go up to the next level. We really understand that market, and we also understand the resources to put around them, to help them grow. About 30% of our portfolio is startups and about 70% are existing businesses that have been around for three or four years. That’s much different from when I first started here 15 years ago. Our portfolio was about 70% affordable housing, but we decided to focus on small business. We put resources in place like the Women’s Business Center to support them.
We found our niche. When you think about the work that we do, up to $50,000 is considered a micro loan. There are a ton of micro lenders in Philadelphia, but not many that were doing loans over $50,000 so we saw that as an opportunity.
Right now, we cap out around $250,000. I could see us going up to a half a million. I think that space between $100,000 and $500,000 is a space that’s not really being hit.
Our challenge is Awareness. In Philadelphia, folks don’t know much about us. One thing about entrepreneurs and folks who are starting businesses, It’s a lonely road. After 27 years, we still run into people who say, “Well, I didn’t even know you guys existed. I didn’t even know what a CDFI is.” I think you got to talk to the bankers because they can make referrals. Part of that conversation is also about educating them on what we do so when they make the referral, it’s a good referral. It’s also about meeting the people who are going to borrow it. In Delaware, we’re working with community organizations and CDCs because they can make a referral. If we come in and we do a presentation at a church, we’ve got a captive audience and that means the church is kind of saying, “Hey, these are good people. Listen to them and they’ll help you.”
You talk in your annual report about getting out of your comfort zone.
It would be easy to continue to lend in Delaware where I have a bunch of relationships and we’re some well-known, or known better, than we are in other places. So, I think that’s kind of a no-brainer for us. Expanding into Philadelphia is not going to be easy. We want to approach things the way we have approached other things — like the loans we made on Market Street to businesses like Bardea, Stitch House, the Faire, Masala Kitchen.. I’m really proud that we’ve played a role in this revitalization of Market Street and that’s been 20 years in the making.
Are you looking at investments in underserved neighborhoods like Riverside?
I’m really excited about REACH Riverside and Kingswood Community Center and the Warehouse Project. (REACH Riverside CEO) Logan (Herring) has been able to raise a lot of money and bring a lot of awareness to what’s going on there. I think there will be an opportunity for us to get involved in that as well, particularly as they move further down the road and opportunities come. I think as they start to build out Riverside and more people are there, then there’ll be opportunity for us to get in and really work with folks to start businesses.
There aren’t a whole lot of folks, even with what’s coming, starting businesses on Governor Printz Boulevard. We’ve run a couple of business-planning course and done some information sessions at Destiny CDC on East 16th Street directly across from Kingswood. But I still think it’s kind of early. What’s happened downtown on Market Street really didn’t happen until people started living down here.
What’s the next big thing in Delaware for your organization?
We received a grant from Chase in 2016 to develop what we call the Corridor Revitalization Fund to regrant to businesses who were either expanding or locating downtown Market Street. At the end of the day, we’re probably going to have about $700,000 in grant money that we’ve given to businesses, plus a few of them we’ve been able to make loans to, as well, and provide other support. I think our next focus will be on these other commercial corridors in the city of Wilmington. So, North Market Street, Fourth Street, Maryland Avenue, Union, Lincoln. I think we want to take what we’ve learned on downtown Market Street to some of these other corridors. Downtown has really come a long way.
By Peter Osborne