Bridges

Bridges Summer 2015

Bridges is a quarterly review of regional community and economic development issues, projects and regulatory changes for practitioners from community-based organizations, as well as for Community Reinvestment Act officers, academics and government of

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I N D E X T H E F E D E R A L R E S E R V E B A N K o f S T . L O U I S | C E N T R A L T O A M E R I C A ' S E C O N O M Y S U M M E R 2 0 1 5 0 to 1 1 to 6 11 to 16 6 to 11 16 to 21 21 to 26 26 to 31 Credit Union CDFIs 4 6 8 Better Homes, Better Loans: Better Business Binghampton Development Corporation: Building Assets and Communities cdac spotlight The Hager Educational Foundation: Empowering Citizens To Make Better Communities By Michael C. Eggleston W alking down West Florissant Ave. in Ferguson, Mo.—ground zero last fall for the social unrest that resulted in several small businesses being damaged and looted—one would not immediately know that a local credit union played a role in deploying much-needed capital that is helping to restore the business district. But that's exactly what happened when Alliance Credit Union disbursed loans, each one totaling $5,000, to 20 small- business owners in the area just hours after the unrest occurred. Frank Evans, human resources director for Alliance, remarked, "We made these loans with zero percent interest and asked very few questions, other than to ensure the person we were talking to owned the business. We were able to disburse the loans in as little as 30 minutes." It seems like a scene straight out of "It's a Wonderful Life!" So, how could a relatively small credit union afford to make these types of loans with so much uncertainty as to whether they would be paid back? Four simple Innovative Credit Union Association Expands Access to Capital words—Community Development Finance Institution (CDFI). In 2012, Alliance acquired its CDFI certifica- tion from the U.S. Department of the Treasury; shortly thereafter, it received an $875,000 grant from Treasury to jumpstart its newly formed CDFI. Alliance made the decision to use the funds for a loan loss reserve, allowing it to expand the credit profile of its members looking for auto, personal and small-business loans. In the after- math of the unrest in Ferguson, Alli- ance—based on the number of loans it had made up to that point using the loan loss reserve as a backstop—had the flexibility to use $100,000 of its grant to assist small-business owners in the city. Although Alliance fully >> continued on Page 3 SOURCE: U.S. Department of the Treasury

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