Loan Pool Set Up for Nonprofit, Small Businesses

A $50-million loan pool has been established for small businesses and nonprofit corporations in California.

The California Economic Development Lending Initiative, or CEDLI, is the largest community development corporation of its type in the country, said George Williamson, CEDLI’s president and chief executive. Thirty-three California banks have joined the program, created by the nonprofit San Francisco Development Fund and the Federal Reserve Bank of San Francisco.

Conceived as a for-profit venture that will pay dividends in three years, CEDLI operates with $5 million in stock purchased by the banks and participating corporations. These founding participants were also required to contribute to the $50-million loan pool.

First Interstate Bank, Union Bank, Founders National Bank, Cedars Bank, California Commerce Bank, Pacific Bell, Kaiser Permanente and Pacific Mutual Life Insurance are among those participating.

“We’re depending on the banks to be active in marketing CEDLI’s products,” Williamson said.

Those products include a lending program for small businesses with at least a year of experience that want to expand. They may apply for loans of $100,000 to $500,000 at CEDLI member banks. The banks will provide 50% of the loan, with CEDLI providing the other half.

“These are not start-up loans,” Williamson said. “We’re trying to maximize on job creation and put the money on expansion.”

In January, CEDLI plans to add two other programs. One will provide funds to nonprofit corporations, which in turn will give loans to entrepreneurs for $1,500 to $25,000.

The other would provide 10-to-15-year real estate loans of up to $250,000 for nonprofit corporations seeking to establish community facilities such as senior centers, day care or business incubator programs.