Hundreds of low-income and minority entrepreneurs in Albuquerque are getting a significant boost from a novel micro-lending program run by Nusenda Credit Union.
The Co-op Capital Program, which Nusenda launched in 2014 in partnership with local community organizations, has channeled nearly $664,000 in small loans to nearly 400 aspiring businesspeople. And now, thanks to $280,000 in new grants from the Kellogg and Albuquerque Community foundations, dozens more startups will gain access to credit that most could not get through traditional lending channels.
The new funding will add four more community-based organizations to the six program partners already working with Nusenda to make loans that range from $250 to $10,000, said Nusenda Senior Vice President Robin Brule.
“One of the biggest barriers in Albuquerque’s startup community is access to capital,” Brule said. “This new cohort of Co-op Capital partners will open new opportunities for local entrepreneurs and bolster our city’s entrepreneurial support network.”
Unlike traditional lenders that rely on credit history and collateral, Co-op Capital relies on its community partners to vouch for individuals seeking credit based on character and trusting relationships, Brule said.
The partners themselves approve the loans, which Nusenda then administers with 5 percent interest. That’s backed by a pool of capital deposited with the credit union through contributions from each partnering organization, plus loans and grants from the Nusenda, Kellogg and Albuquerque Community foundations.
To date, the program reports only a 1 percent default rate.
Kellogg previously provided $500,000 to underwrite loans, plus $300,000 to build administrative capacity among community partners to manage lending activity, said Kellogg Program Officer Alvin Warren.
Kellogg and the Albuquerque Community Foundation jointly provided another $80,000 this year to build administrative capacity among the four new partners — the South Valley Economic Development Center, the University of New Mexico’s Innovation Academy, and food business training and assistance groups Three Sisters Kitchen and the Street Food Institute.
Albuquerque Community Foundation also approved a $200,000 grant to help finance loans for the new partners as part of its “impact investing” program, which earns fewer returns but offers more local, social impact, said foundation Vice President Kelli Cooper.
The new program partners will begin making loans in January, benefitting student startups, food businesses and credit-marginalized entrepreneurs in the South Valley.
“The program helps bridge a critical gap in the services we can offer,” said South Valley Economic Development Center Executive Director Josue Olivares.