Partnership brings much-needed loans to small businesses
‘These businesses need cash, and that’s one thing we have right now.’
Desert Financial Credit Union in Phoenix has entered into a partnership with the City of Tempe, Ariz., 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 intent is to help local companies overcome the financial challenges the coronavirus (COVID-19) has caused.
Businesses can use the funds to cover payroll or rent, pay suppliers, or address other needs to sustain 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/CEO at the $4.9 billion asset credit union. “We devised a program that helps with cash flow needs for a short time. They aren't grants, they're not gifts, they're true loans.”
The loans have a 4% annual percentage rate and a 48-month term. “We already approved our first one,” Meshey says.
The City of Tempe guarantees the loans. “But I think most of these loans will be paid back,” Meshey says. “We’re credit qualifying them, and we have to turn down some applicants.”
Desert Financial doesn’t make a profit on the loans, Meshey says. “These businesses need cash, and that’s one thing we have right now. I’m not interested in making money. I’m interested in helping people.”
He says the credit union received more than 30 requests for the loans within the first 24 hours of the program’s announcement. “We’ve got every kind of business from nail salons to law firms applying for these loans,” Meshey says. “It’s really fitting a need.”
He wants to extend the program to other municipalities Desert Financial serves.
“It’s good for the local chambers of commerce, and it’s good for small businesses at a critical time,” Meshey says. “We’ve got the program in place. It’s a great fit for what we do as a credit union.”