Small business owner James Brock and his wife, Karla.
Small business owner James Brock and his wife, Karla.
Financial Health
June 30, 2016

A ‘bridge’ for small businesses in California

When small businesses (like this farm) are ready to grow but can’t easily get a loan, a nonprofit supported by Wells Fargo can help with funding and mentoring.

Sometimes a small business owner’s biggest challenge isn’t the grand opening, but managing the growth spurts.

When Farmelot, a sustainable farming operation in Vina, California, acquired large commercial customers, it needed more greenhouse space to meet the new demand. Farmelot owner James Brock (pictured above with his wife, Karla) turned to 3CORE for a loan to fund the expansion.

“Many small businesses are financed with high-interest credit cards, second mortgages, or loans from friends and family,” says Marc Nemanic, executive director for 3CORE, a nonprofit lender and economic development group in Chico, California. “Our goal is to help these businesses obtain good capital so they can grow while being able to repay their loan at an affordable price and in a reasonable amount of time.”

3CORE provides financing for small businesses, nonprofits, and municipalities in Northern California that for one reason or another can’t receive funding from traditional sources. Marc calls these small businesses the “near-bankables” — they are ready to grow but fail to qualify for conventional loans because they may not have hard assets or meet certain criteria. These groups are usually in their first five years of business and are either just getting started, about to expand, or developing new programs when they request help, Marc says.

“We finance these groups to make things happen that wouldn’t otherwise happen, or would take a while, if they received funding elsewhere,” Marc says.

In addition to providing capital, 3CORE mentors and counsels small business owners, keeping in mind what a conventional lender is looking for. “Our job is to be a bridge for them and get them to a point where they can go into a bank and get a conventional loan,” Marc says.

3CORE has helped Farmelot learn to manage its finances so the small farm can evaluate its profits and losses as it expands, James says.

“Sometimes it’s hard to evaluate your business based on day-to-day activities,” James says. “3CORE is always helpful and operates with the ‘we’re all in this together’ mindset. If you’re not successful, they’re not successful, and vice versa.”

Spurring economic growth

3CORE also leverages its resources and teams with fellow economic development groups to spur the rural area’s economic growth. One of the ways 3CORE is doing that is through the California Finance Consortium, a partnership of rural economic development organizations in Northern California. By working with five other economic development groups, 3CORE helps make capital go farther for small- and medium-sized small businesses in underserved areas, Marc says.

“There are not enough resources for us to be lone wolves,” Marc says. “We don’t just think of our own needs. We look at ways to collaborate.”

“When other banks know Wells Fargo has invested in us, it opens the doors.”

In 2015, Wells Fargo provided a $50,000 grant to support the California Finance Consortium. It was one of three grants totaling $100,000 that Wells Fargo awarded 3CORE in 2015. Since 2002, Wells Fargo has provided 3CORE with about $1.2 million in loans and grants.

Wells Fargo’s support also has allowed 3CORE to gain more investors and continue to serve small businesses. Marc says: “Not only has Wells Fargo’s direct assistance been important, but when other banks know Wells Fargo has invested in us, it opens the doors.”

Kären Woodruff, a Community Affairs representative for Wells Fargo, says, “3CORE is strong, collaborative, self-sustainable, and well run. They leverage their strengths and those of their partners to create opportunities for everyone to succeed beyond their own community. Micro and small businesses are often not ready to work with banks, so it’s important to support organizations like 3CORE that help them grow and build capacity.”