Micro Businesses Depend on the Nebraska Enterprise Fund

Nebraska Enterprise Fund (NEF) is a private, non-profit organization that was formed in 1994 to help Nebraska’s micro and small businesses develop. Micro businesses are small, self-employed, start-up or home-based business consisting of 10 or fewer employees. Micro and small businesses’ growth and development fuel Nebraska’s economy and, for several years, NEF has helped these businesses in their search for capital to expand resources, services or simply start up.

NEF works as an intermediary between national, state and local funds and grants and the businesses that are benefiting from said funds and grants. In 2010, programs funded by NEF as a contract provider for the Nebraska Microenterprise Act assisted 3,739 participants. Their entire portfolio value was more than $7.5 million. A survey conducted in 2009 of those businesses who benefited from NEF and program support in 2007 showed that the loans benefited an average of 2.8 employees (not including the owners of the businesses) with these employees earning an average of $11.01 an hour.
Recently, NEF began providing direct loans to businesses to fill financial gaps. NEF is planning to expand this service in areas where there is an unmet need. As a certified Community Development Financial Institution (CDFI), NEF can provide businesses up to $150,000 in direct loan assistance.

NEF’s provision of loans and program assistance for businesses is great for these businesses, but perhaps its most innovative new product is the Certificate of Deposit Guarantee, which involves bank loan operators. Often, when a business applies for a loan, a bank may be willing to make the loan, but the business owner may not have sufficient collateral. This is where NEF’s CD Guarantee steps in. NEF opens a CD with the bank that is providing the loan, and the CD is pledged as security for the bank’s loan. NEF will support a business loan with up to $30,000, or 50 percent of the business loan (whichever is less), with this assistance.

With the innovative CD project, NEF is an excellent partner to banks as well as businesses. John Laflin of Pinnacle Bank said: “We are glad to be able to work with Nebraska Enterprise Fund to utilize their CD guarantee product to back our loan to help a young professional business get their start. NEF utilized our underwriting information to help in their approval process and it all flowed easily for us.”

One such Nebraska business that benefited from NEF’s CD Guarantee is Rider Chiropractic, a professional medical business that started during the summer of 2010 and serves the northern Lancaster community and the Waverly area. Licensed chiropractor and owner Rachelle Rider has seen an exciting start to her new business as new patients entered her doors at triple the rate originally projected. Looking toward the future, Rider Chiropractic will focus on providing necessary services to clients and growing the business. If the business demand grows beyond the capacity of one chiropractor, there could be potential to bring in another chiropractor and provide a job for him or her and an assistant.

“Nebraska Enterprise Fund CD backing allowed me to realize my dream of opening my chiropractic clinic,” Rider said. ”Without them I would not have been able to have the cash flow necessary to cover expenses until the business could support itself. They made the process so easy and have been a joy to work with.”

Another business benefiting from NEF’s CD Guarantee is Rief Design and Manufacturing, LLC. Adam Rief, a 2008 graduate of the University of Nebraska’s mechanized systems program, and his father Steve Rief founded the micro-business in January 2006. According to NEF’s profile on Rief Design, the business “specializes in custom manufacturing of agricultural equipment as well as general welding on and off site. The business provides new and innovative equipment used in agricultural applications that is more efficient than other brands that customers have used in the past. Their products can be custom ordered to fit the customer’s exact needs…The Riefs have produced and helped custom fit 25 different products.”

Soon, the building Rief Design used for operations and manufacturing became too small to build multiple items at once. With growing demand for their products, father and son determined they needed a larger production building.

Northeast Nebraska Economic Development District (NENEDD) staff prepared a business plan and participated in financing part of a loan package that included the local bank’s assistance. The NEF’s CD Guarantee enabled the bank to make its direct loan (part of the total loan package) to help finance the construction of a new building for the Riefs. With this expansion, Rief Design and Manufacturing, LLC has been able to continue to provide the Riefs with full-time jobs and open a new full-time position for additional help.

Kris Jerke, the business banking vice president of Platte Valley State Bank and Trust, has worked with NEF on three loan deals. Of the process, he said: “I would highly recommend that other business bankers seek out dialogue with the NEF staff to see how they may be able to utilize their programs for their respective organizations…NEF is one of the non-traditional means that needs to be explored and can come in quite useful as an alternative to more traditional means.” In regards to NEF’s future, Jerke said: “As awareness grows, I can see NEFs financing programs continuing to expand in their outreach to assist businesses all across our state. The key will be education of our bankers in Nebraska and their willingness to think ‘outside the box’ in their search to make business owners’ dreams a reality.”

Nebraska Enterprise Fund partners with several business development services that operate across Nebraska, like Nebraska Edge; organizations that target specific areas of Nebraska, like Northeast Economic Development Inc.; those that aid minorities, like Midland Latino Community Development Corporation; those that operate on a county level, like Hastings Community Redevelopment Authority; and large nationwide charity organizations, like Catholic Charities as well as several others in these categories.

A complete list of NEF’s partners can be found here: http://www.nebbiz.org/business_resource_directory.php

To learn more about Nebraska Enterprise Fund, or to see how NEF can help your growing business, visit http://www.nebbiz.org/.