ESI’s Lee Huang hosts a Q&A discussion with Vandell Hampton, President and CEO of True Access Capital, discussing True Access Capital’s mission and their work around Philadelphia.
VH: We operated as First State Community Loan Fund for nearly 30 years. That name is pretty specific to Delaware, which often calls itself the “First State.” But about a year ago we decided to take a hard look at ourselves and how we present our business case to customers, funders and others. Our mission of serving low-income, women, minority, and other underserved clients with technical assistance and access to capital hasn’t changed; but over the years, so much about the way we work, and the scope and scale of our operations has changed. We’re bigger, we serve more clients, and our growth plans expand well beyond Delaware. So, we sat down with our marketing agency, NüPOINT Marketing, and they took the staff and Board through a SWOT process and ultimately some creative explorations. We talked a lot about what was working with the old brand, what we wanted to keep, and how we wanted to position ourselves for the future. One of the things we came to understand is that we were offering our products and services under a patchwork of once-off brand names and that little, if any of that brand value was coming back to us.
After months of discussion and design, we boiled all of it down to a short list of brand attributes that speak to the nature of our products and services. Things like truth, equity, access, flexibility kept rising to the top. I won’t say it was a straight shot from there to the name True Access Capital, because the process was more involved than that; but in time we landed on True Access Capital. We think it does a better job than the old name at signaling what we do and how we do it, it’s more customer and outward facing and less institutional sounding than the old name, and it certainly doesn’t limit us to Delaware. And one of the best things is that all of our products and services are now organized under a common True Access brand architecture that includes a strong visual identity.
We think all these changes are important ways to position True Access Capital for the next 30 years of growth across this region.
VH: True Access Capital is a not-for-profit, Community Development Financial Institution (CDFI). As a CDFI, we’re certified by the United State Treasury to provide financial products and services to communities underserved by traditional financial institutions. The businesses we fund create jobs, build wealth, and stimulate economic activity and affordable housing in disadvantaged communities—and we’re mission-driven about this work. Right now, we support small and micro-businesses in Delaware and in Bucks, Chester, Delaware, Montgomery and Philadelphia Counties. We’ve lent over $40 million to more than 1,300 borrowers in these markets, but we’re definitely looking to grow that portfolio in these and other markets around the region.
We’re looking for deals that many others might avoid. True Access Capital supports deals that don’t qualify for traditional funding. Sometimes that means it’s a business idea that really is just a concept, or a proposal to enter a risky category like a restaurant or a retail store. Other times the business owner has some credit challenges. We’re also looking to help women and minority-led companies that need to get a foothold, especially in low-income areas.
In the Philadelphia market specifically, we’re focusing on loans between $50,000 and $250,000. Some of our recent deals in the expanded market include Marsh + Mane, a natural hair and beauty supply shop on South 4th Street in Philadelphia; Cottage Seven Academy, a private school that serves children with emotional and behavioral challenges, located in Pottstown; and Nicetown Grocery Store, a bodega style, convenience store on N. Bland Street in the Nicetown section of Philadelphia.
VH: At the end of the day, what we need more than anything is funding for loan capital, loan reserves, and to support the technical assistance programs that prepare small businesspeople for success. Capital is always in demand and to be frank, we can put as much of it to work on the street in disadvantaged communities as we can source. At the federal level, the most consistent source of grant funding for loan capital is the Treasury Department’s CDFI Fund. Some states also make funding available for organizations like True Access Capital and we seek our fair share of that. And we work with local government, financial institutions, foundations and others to access resources that some earmark for economic development and community reinvestment work. But it’s a constant struggle.
Capital demand is especially high in the African American community, where clients don’t always have access to generational wealth or have not grown up in circumstances where they’ve been exposed to basic business principles. This racial wealth gap is real, and because banks are typically risk adverse, many of these people just can’t access conventional sources of capital. Those situations are typically a sweet spot for True Access Capital.
But small business lending is risky and difficult. Twenty percent of these businesses will fail in the first year, and as many as 50% will be out of business by the fifth year. But when we do it right–and we get it right more often than not—the payoff for the borrower, for the community, and for True Access is exponential. We’re talking about an increased tax base, job creation, economic revitalization, and creating a foundation from which families can build generational wealth. None of these things show up on a bank’s bottom line; but unless organizations like True Access Capital address these kinds of metrics, while also paying attention to the bottom line, underserved communities will remain underserved.
VH: The True Access Capital expansion underway in southeastern Pennsylvania is an important way to broaden access to capital and foster greater equity for women and minority businesspeople in this region. Since 2012, we’ve lent $3.2 million in Delaware and Chester counties, so it makes sense to expand our reach elsewhere in the area. Right now, we’re focusing our efforts in Bucks, Montgomery, and Philadelphia counties and I’m encouraging both funders and potential borrowers in these areas to reach out to us. We’re focused on deals in the $50,000 to $250,000 range, especially in communities like Philadelphia with both large minority and low-to-moderate income areas. True Access Capital is a great partner and we encourage folks to get to know us better.
Vandell (Van) Hampton Jr., is the President & CEO of True Access Capital (formerly, First State Community Loan Fund) and he has served in this position since 2004. True Access Capital is a federally, certified, Community Development Financial Institution that specializes in providing loan capital and technical assistance to women and minority-led companies and small businesses located in low-income communities.
Lee Huang is Senior Vice President & Principal of ESI. Lee brings over 20 years of experience in economic development to his public, private, institutional, and not-for-profit clients. His economic inclusion work has included analyses of the utilization of minority- and women-owned businesses in municipal contracts in Philadelphia, as well as examinations of home lending, business lending, and branch location patterns in Philadelphia, Washington, DC, and New York City.