3 Banks Join Network to Aid Small Businesses

Three Ventura County community banks have joined with more than 30 other financial institutions statewide to establish a network to lend money to small businesses, nonprofit organizations and other borrowers that ordinarily may not qualify for loans.

Thousand Oaks-based Los Robles Bank, Channel Islands National Bank of Oxnard and Ventura’s American Commercial Bank are participating in the California Economic Development Lending Initiative (CEDLI). The corporation is co-sponsored by the Federal Reserve Bank of San Francisco and the Development Fund, a nonprofit organization that helps finance affordable housing and community development programs in San Francisco.

The lending initiative’s banks, from large institutions such as Union Bank of San Francisco to smaller community banks, will make available a loan pool of about $50 million for lending. Loan applications are being accepted beginning today.

A primary goal of the corporation is to find borrowers who have the potential to succeed in business and to create jobs, but who have limited collateral, no proven track record or are otherwise high loan risks.

The bank collective will also lend money to finance community facilities--such as day-care centers--and to help finance local development organizations, which will in turn lend money within their communities.

Members of the collective each bought a portion of the $4.3 million in total stock, and agreed to contribute an amount of loan funds proportionate to their size. The three Ventura County banks each purchased $15,000 in stock, and will each be responsible for about $150,000 of the $50 million in available funds. Organizers said the investing banks ultimately may receive returns of about 1% on their loans above the repaid principle.

Los Robles Bank has assets of $73 million, Channel Islands National has assets of $65 million, and American Commercial has assets of $115 million. Each has three branches.

A central investment committee, made up of banking representatives from throughout the state, will decide which loan applications will be accepted. Local participating banks will refer potential borrowers when possible, hoping to spur Ventura County businesses.

“There are a lot of struggling little businesses in Ventura County that could use the help, and there are a lot of unemployed people who could run a business if they had the money to do it,” said Robert Hamilton, president of Los Robles Bank.

Whereas a local bank couldn’t risk lending money to these entrepreneurs, the bank network can.

“I don’t think anybody [in the network] will lose all their money,” said Hamilton. “But the potential is that somebody starts a business, gets 10 or 15 people on the payroll. . . . Hopefully a lot of small businesses will start up in the area.”

Edward Paul, president of Channel Islands National Bank, said he anticipates local nonprofit groups to benefit most from the loans.

“For instance, if a group needs money to modify a house for day care, or to set up a day-care facility,” he said. “That’s a very difficult loan for banks to do just because of the very nature of the business. We can refer them” to the lending initiative.