When Indiana set aside $500 million last year for its nationally recognized Regional Economic Acceleration and Development Initiative (READI), proposals started rolling in from cities and towns across the state. Many are bricks-and-mortar projects that hold huge potential for their communities, but folks in southern Indiana had a different idea.

One Southern Indiana (1si), the local economic development organization for Clark and Floyd counties, saw READI as an opportunity to finally achieve a long-simmering goal: building quality of place by strengthening the region’s small businesses.

1si is creating a revolving loan pool, the ONE Fund, to help small business owners and entrepreneurs in the region achieve their dreams. Made possible by a $125,000 READI grant that will cover its administrative expenses, the ONE Fund is a comprehensive program to both fund and educate small business owners in Clark, Floyd, Jefferson, Scott and Washington counties.

 

“Having thriving small businesses is central to quality of place,” said 1si President and CEO Wendy Dant Chesser. “If you have a downtown Main Street with no stores or shops, that’s not viewed as a community asset.”  

 

The One Fund’s goal is to make sure small businesses have the opportunity to line Main Streets throughout the region. Meant for start-ups and aspiring small business owners that are too new or lack the collateral to work with commercial lenders, the ONE Fund has amassed a loan pool of almost $340,000 thanks to contributions from a variety of sources, including Caesars Foundation of Floyd County, Washington County Economic Growth Partnership, the Town of Clarksville, the City of Jeffersonville, and the Floyd County Commissioners. 

Loans of between $2,000 and $20,000 at a rate of Prime Rate plus 2% will be available, with the average loan size around $15,000, said Mike Fulkerson, 1si’s Small Business Navigator, who joined the organization last year to help get the ONE Fund off the ground. Repayment terms are two years for working capital loans, five years for machinery and equipment financing, and seven years for real estate/bricks-and-mortar loans. At least $30,000 of the total is earmarked for minority and other underrepresented applicants. 

The fund’s seven-member loan review committee was set to review its first two applications, both in food service/catering, in September. Another two, one in hospitality and another in apparel, are working on applications. Fulkerson said it will take about 30 days from loan approval to disbursement of funds. He is confident the money will be well spent.

“The need for capital is real,” said Fulkerson. “These small businesses are savvy, and super thrifty. They will maximize every penny in a loan of this size.” 

Fulkerson is excited about helping businesses that are loaded with potential but short on funds.

“They have a fantastic product or a fantastic service, but they’re getting turned down [by lenders] as they try to expand, grow and hit that next milestone.”

Fulkerson and his colleagues are counting on commercial lenders to spread the word about the ONE Fund to loan applicants who don’t quite qualify for traditional funding. The fund is also being touted at local co-working spaces and chambers of commerce and via word of mouth.

The ultimate goal, said Dant Chesser, is to help small businesses graduate into the commercial banking system. But 1si isn’t leaving that to chance. The ONE Fund comes with a full slate of educational opportunities for its clients and other small businesses.

1si is partnering with the Indiana Small Business Development Center to offer the Small Business Navigator Program to make the ONE Fund a one-stop shop for both financing and education.  

Advising services provided under the Small Business Navigator Program include financial budgeting, bookkeeping, payroll, tax management, market research and business planning. In addition, regular classes will be presented by industry experts for owners at every stage of business. The loan review committee will work with applicants to match them with appropriate training and counseling.

“The education component really sets us apart,” said Dant Chesser. 

Dant Chesser and her staff at 1si had been working toward creating a fund for seven years, then the pandemic hit. Rather than derail their efforts, the pandemic offered proof of concept. They took $30,000 they had at the dawn of the shutdown and grew it to more than $1 million, money they used to make more than 125 COVID-relief loans to small businesses.

“It showed us that a micro-lending program was more needed than ever.”

When the state launched READI and awarded $50 million in READI funds to Our Southern Indiana Regional Development Authority, it was a no-brainer for 1si to apply for the $125,000. Though the amount is smaller than many READI grants that have been awarded, the impact of having administrative funding in hand for the ONE Fund is huge. It gives donors confidence that the money they contribute will go directly to small businesses in need, said Dant Chesser.

“If locally owned businesses are our backbone, it makes sense for this to be among the first funded so that the backbone of our community continues to be strong.”