Mobile to subsidize private loans in aim to encourage entrepreneurs

$2 million, matched by Commonwealth National Bank, will create revolving loan fund
Published: Apr. 25, 2023 at 5:34 PM CDT
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MOBILE, Ala. (WALA) - Mayor Sandy Stimpson on Tuesday rolled out the latest program supported by COVID-19 relief funds – an initiative to encourage business startups by subsidizing private bank loans.

Stimpson calls the program “Building a Business Legacy” and projects it will create $10 million worth of wealth over the next five years.

“What we know is that if we’re gonna raise the wealth of all Mobilians, you’ve got to do it through the creation of wealth,” he said a news conference. “And you can do that through businesses.”

The city will use $2 million from its share of the American Rescue Plan Act, passed by Congress in 2021 to help the country recover from the COVID-19 pandemic. Commonwealth National Bank will match that money to create a resolving loan fund that the bank estimates will help 50 to 100 entrepreneurs over the next five years.

Commonwealth traditionally has targeted underserved low-income and African-American communities. Prichard resident Calvin Gill used a series of loans from the bank to start and grow Sawmill USA 1 Pallet Manufacturing Co. in 2021. The company makes shipping pallets, and Gill said he has been able to beat his competitors’ prices by buying raw materials and making the pallets rather than using more expensive, already-processed lumber.

Gill said he already had the land in Prichard’s Whistler community and the know-how from decades as a construction worker.

What he lacked was the capital. That’s where the bank came in.

“Commonwealth Bank has been very, very instrumental in our growth. … They was there when we needed them,” he said.

Commonwealth President and CEO Sidney King said the taxpayer money will allow the bank to expand its lending and offer a slightly-below-market-interest rate to borrowers in the program. He said those loans mostly would be less than $100,000.

“We’re so excited to be a part of this and to bring this system to the city,” he said before a ceremonial document signing with the mayor to formally transfer the funds. “You know, one of our goals at Commonwealth is to make wealth common in the African American community.”

Although the program is geared toward low-income folks, King said it is open to anyone.

“The primary thing we’re looking for is the ability to pay it back,” he said.

Underscoring that point, Stimpson said the bank is not a charity. He said the taxpayer funds will serve as a backstop.

“We also know that sometimes there are challenges, and so the bank can only afford to lose so much money,” he said. “But with this additional funding from the city, it gives them some resiliency in making those loans to individuals, ‘casuse we all know that startup businesses … are high risk.”

King said he believes the city is poised for growth.

“We’re about to do some major changes happening in this city,” he said. “Mobile is on the verge of explosion; it’s on the verge of growth. And we want to be a part of that. We want to see minority businesses take advantage of that growth and be a part of that experience.”

Archnique Kidd, the supplier diversity manager for the city, said the program includes a training component to help borrowers with small business management.

“So this program will not only be a loan program but also and educational program for those small businesses,” she said.

Gill said he exceeded his business plan in his first year. Now, he said, he is looking to expand. The business occupies 7 of the property’s 24 acres. He said he has nine employees and hopes to expand to 15 to 20 in the next few months. He said he recently purchased a wood-chipper that will convert leftover wood into wood chips that can be sold.

Gill said he wholeheartedly supports the Mobile-Commonwealth initiative to help businesses like his.

“There are a lot of underserved minorities, as well as minority businesses, that lack of capital, that have great ideas, great vision,” he said. “But it’s like anything else in the world. You know, it takes money to make it happen.”