partnership brings much-needed loans to small businesses | 2020-04-24
Desert Financial Credit Union in Phoenix has partnered with the city of Tempe, Arizona to create a $1 million small business emergency loan program.
Tempe businesses that employ between 5 and 50 people may be eligible for microloans of $5,000 to $20,000. The intention is to help local businesses overcome the financial challenges that the coronavirus (COVID-19) has caused.
Businesses can use the funds to cover payroll or rent, pay suppliers, or meet other needs to support operations. The first payment is deferred for 90 days to help businesses get back on their feet.
“These businesses really need help,” says Jeff Meshey, president and CEO of the $4.9 billion asset credit union. “We have designed a program that helps meet cash flow needs for a short period of time. These are not grants, these are not gifts, these are real loans.
The loans have an annual percentage rate of 4% and a term of 48 months. “We’ve already approved our first,” Meshey says.
The City of Tempe guarantees the loans. “But I think most of those loans will be repaid,” Meshey says. “We qualify them for credit, and we have to turn down some applicants.”
Desert Financial doesn’t make a profit on loans, Meshey says. “These businesses need cash, and that’s something we have right now. I am not interested in making money. What interests me is helping people.
He says the credit union received more than 30 loan applications in the first 24 hours after the program was announced. “We have all kinds of businesses, from nail salons to law firms applying for these loans,” says Meshey. “It really meets a need.”
He wants to expand the program to other municipalities that Desert Financial serves.
“It’s good for local chambers of commerce, and it’s good for small businesses at a critical time,” Meshey says. “We have the program in place. It fits perfectly with what we do as a credit union.