What’s in a name? If the name is Business Impact NW, formerly known as Community Capital Development, it’s a name that can represent a hard-to-find loan to start a business, to create a viable business plan for a good idea, or to tap into the technical assistance needed to launch a new business in an underserved community in the Pacific Northwest.
For Sounders without an established credit history, women who are entering the workforce as business owners, or veterans transitioning from military service to the rank of new business founder, Business Impact NW is a name that is synonymous with creating opportunity.
The name of Joe Sky-Tucker is also one that is making impact. Joe was recently named the executive director of this CDFI, which stands for Community Development Financial Institution. The last name of Sky-Tucker has a lineage that can be traced to the American immigrant experience. On Ellis island, under the Statue of Liberty, Joe’s maternal grandmother’s name was shortened from Skidelski to Sky. It seems to fit well with Joe’s passion as a trained social worker committed to helping new businesses get off the ground and fly closer to the sun.
Joe tells Seattle24x7 that he looks at the world through a special lens:
“Micro-enterprise and small business ownership are the primary ways communities can grow and build assets from the bottom up, assets that can be passed on for generations,” he says. The challenges are enormous. “Being a business owner is the hardest job I’ve ever seen anybody take on. You don’t have days off. You don’t typically have a management team around you. It can be very isolating. The amount of time needed to commit to a new business venture is one of the greatest misunderstandings for new business owners.”
In this interview, Sky-Tucker describes the formula for success within Business Impact NW. He invites other financial institutions to add their energy and capital to the organization’s community lending efforts and make greater impact and positive ROI in the process.
Seattle24x7: How would you describe the mission of Business Impact NW?
Joe Sky-Tucker: I like to say that we fund and support the businesses that create the community we want to live in. We’re the corner coffee shop, or the dry cleaner, or the CPA firm that needs to figure out their business plan.
Our mission is to grow businesses that create jobs in our region’s underserved communities. We focus on working with small businesses from historically disenfranchised communities to help them create economic activity. To do that, we exist in a space on the lending side as a kind of bridge lender or gap lender. If a business can’t get a loan from their bank, they can come to us and we will try to do what we can to get them a starter loan and into mainstream financing.
Seattle24x7: Business Impact NW is the home of the Women’s Business Center and Veterans Business Outreach Center. What can you tell us about these two groups?
Joe Sky-Tucker: Both of these programs are funded through the SBA. The Veterans Business Outreach Center covers Oregon, Washington, Idaho and Alaska and conducts a lot of their training programs including their “Boots to Business” program, on actual military bases around the area. The program is focused on people transitioning from active duty to civilian life who are interested in starting their own business. The Women’s Business Center covers the state of Washington but the service delivery is focused on the three county area of King, Snohomish and Pierce counties. All of the programs include training and one-on-one coaching and counseling through videoconferencing online or over the phone. You do not need to be a woman or a veteran to participate in the offerings each provides. “Our outreach is directed into those communities, but we will serve anyone who walks through our doors,” says Joe.
Seattle24x7: Are your lending products comparable to mainstream financing?
Joe Sky-Tucker: Our rates are typically a little higher. Our average interest rate is around 9%. Our losses are also higher, probably in the 3% range. Our risk tolerance is higher as well.
Seattle24x7: How would you contrast your role as an economic development resource with other entities like the SBA?
Joe Sky-Tucker: We work very closely with the SBA. They fund two of our technical assistance programs — so they grant us funding to provide the hands-on training, counseling and business plan help They also provide the capital to us to do micro-loans and some grant funding to do the extra, hands-on technical assistance from a lending perspective that a micro-loan borrower needs
Seattle24x7: Are micro-loans easier to arrange these days?
Joe Sky-Tucker: One of the ironies in lending is that it can be harder in many respects to get a small loan than it is to get a big loan. For example, if you’re a business that needs a $5 million dollar loan versus a $50,000 loan, you’re actually in a stronger financial position. With a smaller loan amount, the risk is obviously lower, but those businesses are closer to the edge of succeeding or failing compared to the ones who can take on larger capital.
We exist in that “gap lending space” and are considered a community lender, one of the few in the Seattle area. We operate along a continuum with other lenders. For instance, the organization called Ventures (formerly Washington CASH) does onramp training and average loan sizes of around $3.000. We do loans from $5-$250,000. Craft3, another community lender, does loans of around $250,000 (they will loan into the millions, but their average loan size is $250k). Each of us is a CDFI, or Community Development Financial Institution. Our federal charter is administered under the Treasury department.
Seattle24x7: Are you lending to both for-profit and non-profit businesses, click-and-mortar as well as brick-and-mortar?
Joe Sky-Tucker: We are primarily lending to for-profit businesses 99% of the time. We can do some non-profit lending but it has to be either a childcare center or a preschool. There are a few other exceptions. We are able to lend do both brick-and-mortar and people who do online sales. We don’t enter into the area of venture capital.
Seattle24x7: Are your lending policies fairly conventional?
Joe Sky-Tucker: For the most part. Loans must be secured by business or personal collateral and there is a personal guarantee required.
Seattle24x7: Can you give us some examples of companies you have helped to get off the ground?
Joe Sky-Tucker: One example is Ultrafino which sells handmade goods via Amazon and their own online site. They are a couple from Ecuador who started a thriving e-commerce business. The loan helped them move from their basement into a warehouse space so they could expand.
We were one of the first lenders to Utilikilt. We’ve funded Broadcast Coffee which does coffee roasting and has three or four locations. Hood Famous Bakery creates cakes infused with Filipino flavoring.
An interesting company we recently funded is OrthoTech a dental appliance maker that uses a 3D printer to take a picture of your mouth and email a file to the lab, instead of having to do a plaster mold to create a crown. It reduces costs along the way and speeds up the process.
Seattle24x7: Funding a company seems like the journey’s destination. You also provide other services to help reach that goal.
Joe Sky-Tucker: Right. We work off of something called the Business Model Canvas which is a framework to outline and create a business plan, and we require borrowers to put together a business plan. I don’t mean a 50-page business plan. We want you to know how to reach your customers, what it will cost to sell your product, and how that will affect your bottom line. We have technical assistance teams in-house to help put together such a plan.
The most popular training we offer is called “Square One.” It’s an orientation into what we do and what services are available through our programs. We want to provide enough of a dose of reality that if applicants are not ready to start a business, they don’t. Or if they’re not ready to get a business loan that they get some help first. We also interest a lot of people in our counseling. We see our role as helping people to make more informed decisions, asking the questions that help them walk through the steps and get to the right place.
Another successful program we have is called Launch & Grow which is run through our Women’s Business Center. Launch & Grow is really startup-focused. It starts with people having a business idea. They then go through seven weeks of classes, once a week, and walk out with a completed business plan.
Seattle24x7: One of the challenges for many businesses today is the ability to “pivot” or refocus their vision and direction on new opportunities if the original mission falters. Is that something you support for your business startups?
Joe Sky-Tucker: Yes, it I can be. The coffee shop that needs to add beer and wine as a revenue generator, or to grow from a coffee cart to a coffee location, are very valid. We trust that the business owner, if they need to change something or pivot to a new market, will be willing to do that. A caterer that has a really popular salad dressing and wants to turn it into a product that they sell independent of their catering business would be supported. It’s a question of understanding their customers and the business. We can support them through those sorts of changes. These are ways we can help them make impact. [24×7]
Business Impact NW is headquartered at 1437 South Jackson in Seattle’s Central district, having purchased the land in 2002. The organization can be reached online at http://businessimpactnw.org/