How CDFIs Play an Important Role for Small Businesses in Traditionally Underserved Markets – Kim Carter Evans

Access to capital is the lifeblood of small businesses and Community Development Financial Institutions or CDFIs are playing an increasingly important role in getting capital into the hands of traditionally underserved market segments. On this week’s episode of The Playbook, host Mark Collier, business consultant for the UGA Small Business Development Center, is joined by Kim Carter Evans, Vice President and Managing Director of TruFund Financial Services. Evans shares important information on the role CDFI’s play in small business growth and development.

Transcription: 

Mark Collier:
Welcome into The Playbook on ASBN, Kim.

Kim Carter Evans:
Thank you for having me. I’m so excited to be here.

Mark Collier:
All right. The options for small business lending, it’s vast.

Kim Carter Evans:
It is.

Mark Collier:
And so share with me the specific role that CDFIs play in the small business financing ecosystem.

Kim Carter Evans:
Sure. So CDFIs came about due to the CRA Act as mission-driven lenders. So most CDFIs are 501(c)(3) non-profits that are certified by the Department of Treasury to provide access to adequate, affordable capital to the most underserved areas of the communities that we live in. So we’re different from banks-

Mark Collier:
Sure.

Kim Carter Evans:
… but we know slight to the big banks because they are very much so partners of ours, but we’re just different. CDFIs have a different lens on lending to those communities.

Mark Collier:
And you have a different mission, I’m going to say

Kim Carter Evans:
Absolutely, absolutely.

Mark Collier:
In terms of, you used the broad term underserved population. Are there census tracks, how do you guys determine that? And is that something that’s readily available that people can go out and see if they’re located in one of those census tracks?

Kim Carter Evans:
So there are a certain census tracks, but it really depends on what the targeted population, our market, for each individual’s CDFI. But when you think about the New Markets Tax Credit platform, there are national investment areas which we call IAs. Those particular areas are designated by the federal government.

Kim Carter Evans:
So if we’re looking to do an investment in a community, we have the ability to put that geographic location by address into a system. And it will tell us if this is in fact an investment area for the New Markets Tax Credit platform. As we’re doing regular small business lending. Sometimes we use that same track to track where we’re actually lending and where that concentration of dollars that are going into our under and disinvested communities.

Kim Carter Evans:
One of the other ways that we look at under investment, it’s just based on the trajectory of any individual city. So for example, our mayor here in Atlanta has priority areas that are under our disinvested community. So we take a look at the strategy for the communities. Where there has been a lack of investment we look at the federal guidelines for that lack of investment, the state, as well as the city. And we look at how we can strategically put more money and more capital into those areas to really elevate those entrepreneurs, and thus elevating the communities as a whole.

Mark Collier:
Absolutely. Now you mentioned IAs. How do those differ from opportunity zones or are they one and the same?

Kim Carter Evans:
They’re not necessarily one and the same, but there is a lot of overlap.

Mark Collier:
Yes, okay.

Kim Carter Evans:
So when you think about opportunity zones, the areas where there is opportunity to have impact in communities, and then you look at a platform like New Markets Tax Credit, there is quite a bit of overlap as to where the most need is in our various communities.

Mark Collier:
Okay. So CDFI, just peel back the layers a little bit more. Tell me a few more ways how CDFIs differ from traditional banks or finance companies in terms of deposit relationships or other differences that are evident.

Kim Carter Evans:
Okay. So CDFIs, Community Development Financial Institutions. So just in the name, community development. So that is our mission. We are not just about making money, but of course, even as a 501(c)(3), you got to make prudent decisions.

Mark Collier:
Absolutely.

Kim Carter Evans:
So we want to make money, but it’s really about the mission and the impact that we have. So when you peel back that community development piece, CDFIs really have that mission to look at where there’s opportunity for impact in a community, and then how we can go about servicing that impact. And there’s really different types of CDFIs.

Kim Carter Evans:
So when you think about TruFund Financial, we are a mission-driven CDFI that really works with the small business community. But you have some of your credit unions or smaller community banks that are also a designated CDFIs. And so some of those are depository institutions, whereas TruFund is a non-depository institutions.

Mark Collier:
Aha.

Kim Carter Evans:
So you can not open up an account with us, we are solely a lender to small businesses, but we operate on multiple pillars. Our mantra is we are more than just a loan, we’re an opportunity.

Mark Collier:
Sure. [crosstalk 00:05:23]

Kim Carter Evans:
So you can get a loan with TruFund, but there’s also other things that small business owners can access with TruFund.

Mark Collier:
Okay. Well, very good. So as with all businesses, target marketing is key.

Kim Carter Evans:
Yes, absolutely.

Mark Collier:
There’s an old adage, the riches are in the niches.

Kim Carter Evans:
Yes. Yes, yes, yes.

Mark Collier:
So share with me, what does TruFund’s target market look like?

Kim Carter Evans:
Our target market is determined by our CDFI certification. So we are targeted and missioned to serve minority and, or women entrepreneurs. And so when you think about the minority groups, we can serve all small businesses and all minority groups, but we have a specific focus in the African-American population of minority.

Mark Collier:
Very good.

Kim Carter Evans:
And we’re now making entree into the Hispanic population of entrepreneurs. Even within that population, we take a look at where there’s really distinct needs. And one of the things that TruFund has really carved out a niche is working with minority contractors-

Mark Collier:
Ah, okay. Good.

Kim Carter Evans:
… minority real estate developers, as well as women entrepreneurs. So again, we can service all small business population. However, when you have your CDFI certification, there is the requirement that a percentage of your portfolio also matches your certified population or targeted population. As well as your board population has to mirror your targeted population. So we are a minority-led CDFI.

Mark Collier:
Ah, very interesting.

Kim Carter Evans:
As such, we are commissioned to serve minority populations.

Mark Collier:
Fantastic. And I also understand the TruFund is relatively new to serving small businesses in greater Atlanta metro area.

Kim Carter Evans:
We are, we are.

Mark Collier:
And what’s made Atlanta such a good service location for TrueFund? Why did you guys select Atlanta, and what were some of the things you look to or hope to accomplish here in the future?

Kim Carter Evans:
What’s interesting is that it happened very organically, Atlanta selected TruFund.

Mark Collier:
Ah, interesting.

Kim Carter Evans:
So we are mission-driven, we are minority-led. When you think about doing business in the South, so we are headquartered in New York. I mean, that’s the capital of business in the United States.

Mark Collier:
Yes, it is. That’s true.

Kim Carter Evans:
But about 12 years ago, in serving the population in Louisiana due to Hurricane Katrina, it brought TruFund to the Southern states. And so we have now begun to expand across the Southern states.

Kim Carter Evans:
And when you think about organic growth across the Southern states, primarily we’re in Louisiana and Alabama. We’ve most recently made entree into the Texas market, really serving the population of Houston and Dallas. And then when you think about, you can’t do business in the South without doing business in Atlanta.

Mark Collier:
No, [crosstalk 00:07:48] of the South, right here in Atlanta.

Kim Carter Evans:
Yeah, it is the hub. I mean, we have the most noted airport.

Mark Collier:
Yes.

Kim Carter Evans:
There’s so much work that’s here. There is diversity and inclusion goals for many contractors, many corporate entities. And so when you think about the work that TruFund does, it’s a very natural fit, an organic growth opportunity.

Mark Collier:
Sure.

Kim Carter Evans:
Two of TruFund’s platforms, our New Market Tax Credit platform as well as our Impact Developers Fund, are both national platforms. So while we have what’s considered our targeted populations and targeted states that are considered our footprint states, we can cover the entire nation with those two particular platforms. We have most recently made an $8.1 million investment in the Covenant House of Atlanta-

Mark Collier:
Ah, fantastic. Fantastic.

Kim Carter Evans:
… to help them build a facility for homeless youth. And so with that investment coming in, really meeting people, making network connections, there was the question of, “Why are you not in Atlanta? Why are you not doing business here?”

Mark Collier:
Sure.

Kim Carter Evans:
And so we’re thinking back about two years now. So with that question and then the onset in 2020 of COVID-19, there was just such an exasperated need for the small business community. And with one of our partners, PNC Bank, having a priority to lend more dollars in the Atlanta market, they tapped into TruFund. And we have since lent $2.5 million through the PPP, which is a Paycheck Protection Program-

Mark Collier:
Yes, [crosstalk 00:09:14] with that.

Kim Carter Evans:
… to small business owners in Atlanta.

Mark Collier:
[crosstalk 00:09:16].

Kim Carter Evans:
So the growth is really just happening organically. Some of our additional business partners and banking partners are now making investments to help bring and heighten TruFund’s brand presence in the market, as well as the local stakeholders.

Mark Collier:
Right.

Kim Carter Evans:
We never want to go into a market and just [inaudible 00:09:35] our way in.

Mark Collier:
Sure.

Kim Carter Evans:
We want to make sure that we are in touch with the local business community, the local business leaders, the local stakeholders. And Atlanta has a vast array of nonprofits that are doing absolutely great work in reaching and meeting the needs of small business owners.

Kim Carter Evans:
But they are also reaching out, gestating. There’s just such a great need, not only in the Atlanta Metropolitan area, but across the state of Georgia.

Mark Collier:
Right. Right.

Kim Carter Evans:
We need a TruFund. We really need you all to come in and support the work that we’re doing. So we’re answering the call.

Mark Collier:
Yeah, you certainly are.

Kim Carter Evans:
We have been answering the call.

Mark Collier:
For sure, yeah.

Kim Carter Evans:
When I think about Grace Fricks at ACE, we have very robust conversations around the great work that she’s done over a number of years here serving small businesses. But she openly expresses the welcoming for a new CDFI to come in, and not come in and take over or take precedent, but come in and really support and fill the necessary gaps that are here.

Mark Collier:
Sure.

Kim Carter Evans:
So just offering an additional layer of service to the small business community.

Mark Collier:
Well, there cannot be enough small business financing support that is geared towards-

Kim Carter Evans:
Absolutely.

Mark Collier:
… underserved small businesses.

Kim Carter Evans:
Yes, yes, yes.

Mark Collier:
I mean, we need more. So we certainly welcome. And here at the UGA SBDC-

Kim Carter Evans:
Yes, yes.

Mark Collier:
… we welcome our partnership with TruFund in terms of delivering those services to small businesses.

Kim Carter Evans:
Absolutely. It has been great thus far, and I look forward to doing great work with you all.

Mark Collier:
All right. So you mentioned earlier about other products or services that you have for small businesses. So talk a little bit about what other … Obviously loans are the main driver, but what other products and services do you have for small businesses that TruFund can deliver?

Kim Carter Evans:
So when I spoke earlier about working across multiple pillars, so small business lending is our bread and butter.

Mark Collier:
Right.

Kim Carter Evans:
But we also provide business advisement and technical assistance services to small businesses, by way of cohort training, one-to-one business advisement, as well as other types of technical assistance. That’s essentially our second tier of operation. Third is disaster recovery.

Mark Collier:
[crosstalk 00:11:49].

Kim Carter Evans:
So you’re looking at a national disaster right now.

Mark Collier:
Sure.

Kim Carter Evans:
And that’s for the last 12 plus months, that has been at the forefront, really coming in as an expert CDFI in the disaster recovery arena. Serving small businesses post COVID-19. When you think about that, you’re looking at the response component.

Mark Collier:
Yes.

Kim Carter Evans:
You look at recovery, and then you go to full restoration. And so for the past 12 months, we’ve really been in a response mode. We’re now moving towards that restoration,

Mark Collier:
Correct.

Kim Carter Evans:
And then you look at our equity products. So that Impact Developers Fund that I mentioned, as well as our New Markets Tax Credit platform. So currently we’re able to offer both of those products, New Markets Tax Credit and Impact Developers, which helps minority real estate developers really grow and build the foundation of their real estate operations.

Mark Collier:
Very good.

Kim Carter Evans:
So both of those are available to Atlanta small businesses.

Mark Collier:
Okay.

Kim Carter Evans:
And moving again in that disaster platform, from PPP, which recently closed, May 31st.

Mark Collier:
[crosstalk 00:12:47]. Correct, yep.

Kim Carter Evans:
The SBA shut that system down. And we’re hearing that maybe there’s a another round, but-

Mark Collier:
You never know.

Kim Carter Evans:
Right, you just never know. So in the interim, TruFund is a part of the SOAR Fund, which is the Southern Opportunity and Resilience Fund.

Mark Collier:
Ah, okay.

Kim Carter Evans:
So we are currently offering small business disaster loans. So these are for businesses that have been impacted by COVID-19 and can show a revenue loss. They are still eligible, even if they received a PPP loan.

Mark Collier:
Okay.

Kim Carter Evans:
Because when you think about Paycheck Protection Program, that was for a very distinct use.

Mark Collier:
Correct.

Kim Carter Evans:
And many businesses did express the need for additional capital. And so the SOAR Fund originators came together to really think about how they could raise additional capital to support the ongoing needs. So that restoration component, that recovery, getting them over the hump.

Kim Carter Evans:
Because of course we see the daunting statistics about businesses that … We’re going to lose several of our small businesses, especially-

Mark Collier:
And we already have.

Kim Carter Evans:
Right. And especially in our minority community.

Mark Collier:
Correct.

Kim Carter Evans:
So this particular fund is another layer to really support small businesses across the Southern states.

Mark Collier:
No, that’s a very good point because the PPP funds, they had a very defined, narrow use of funds statement.

Kim Carter Evans:
Correct, correct.

Mark Collier:
And if the SOAR Fund can be an adjunct to that-

Kim Carter Evans:
Absolutely.

Mark Collier:
… and they can offer more of a broader category of what those use of funds are-

Kim Carter Evans:
Yes.

Mark Collier:
… then that will certainly help the small business committee.

Kim Carter Evans:
Absolutely.

Mark Collier:
That makes perfect sense.

Kim Carter Evans:
And that is the definite use for it. And so for businesses that are interested in learning more about the SOAR Fund, they can go to the SOAR Fund.org website. They can also visit TruFund’s website and connect to the SOAR Fund through that methodology.

Kim Carter Evans:
And then also just reach out to any of our local offices, and we can get them with the right lending officer or one of our business development officers to learn more about that product.

Mark Collier:
All right.

Kim Carter Evans:
But in addition too, when I spoke about business advisement services, we have most recently, as of last week, while I was out, EDA has made an investment in TruFund through their Cares Act funding-

Mark Collier:
Ah, very good.

Kim Carter Evans:
… to support the small businesses of the 10-county Metropolitan area by providing business advisement services, resiliency planning and development for area small businesses. So we’re really looking forward to making an official announcement alongside EDA about those dollars that are, again, to support that 10-county Metropolitan area.

Kim Carter Evans:
As well as regions has most recently made an investment for us to expand our Women in Business and Empowerment Program from the states of Alabama and Louisiana, and now into Georgia. So we’re really, really excited about this partnership with Regions to expand that programming. It’s really been a growing program. And we launched it in 2016 in Birmingham, Alabama.

Mark Collier:
Okay.

Kim Carter Evans:
It has since grown to support business owners across Louisiana, and now we’re tiptoeing into Georgia with it.

Mark Collier:
All right.

Kim Carter Evans:
So we were saying tiptoe and Regions said, “No, it’s time to bring it in full speed.”

Mark Collier:
I like it.

Kim Carter Evans:
So working with local CRA officers with Regions to really broaden the brand presence of that program. And just really looking forward to serving small women entrepreneurs here.

Mark Collier:
All right. So, with those exciting initiatives on tap, so what does the future for TruFund look like in terms of serving more minority businesses in the Atlanta market service area?

Kim Carter Evans:
As we said, the numbers, the data shows exactly why the growth has been very organic. You absolutely have to look at data to substantiate that, one, there is a need that we can fill. And one, that the business owners that we’re commissioned to serve are here, and that’s absolutely so.

Mark Collier:
Okay.

Kim Carter Evans:
So when I think about the future of us serving, I just look forward to partnering with organizations like yours. As I stated, organizations like ACE, LiftFund, LISC, you name it, all of the local banks, local corporations, to really serve the growing need for entrepreneurs.

Kim Carter Evans:
And then when you even look at the population growth for Atlanta over the next few years. And every study that’s out there doesn’t just speak about the population growth, but they also speak about the land of opportunity, which is Atlanta.

Mark Collier:
Yes.

Kim Carter Evans:
And the number of entrepreneurs that are going to be present in this market over the next five years.

Mark Collier:
Absolutely.

Kim Carter Evans:
So I definitely see windows really opening up, and we stand ready to really support those small businesses as they need us.

Mark Collier:
All right. Now Georgia is one of the number one states in the nation for entrepreneurial growth-

Kim Carter Evans:
It is.

Mark Collier:
… both for majority and minority businesses, and I do see that trend continuing.

Kim Carter Evans:
Absolutely, absolutely.

Mark Collier:
Kim Carter Evans, Vice President and Managing Director of the Trufund Financial Services. I want to thank you for taking the time to come in today.

Kim Carter Evans:
Thank you. Thank you.

Mark Collier:
You’ve relayed some very important information about the future of business financing here in Atlanta. And I’d like to have you back on in the future and we can talk more about it.

Kim Carter Evans:
Would love it, would love it. Love it.

Mark Collier:
All right.

Kim Carter Evans:
Looking forward to it. Thank you so much, Mark.

Mark Collier:
You’re welcome.

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