Grow Modesto Fund: increasing access to capital and training for Modesto’s low-income entrepreneurs

Journal Title
Journal ISSN
Volume Title
Southern New Hampshire University
In today’s credit-driven and increasingly complex business environment, low income entrepreneurs struggle to obtain the financing they need to startup and grow. Too small to attract investors and business bankers, many don’t know where to turn. Traditional banking standards require at least two (profitable) years in business, strong credit history, and collateral to obtain a loan. Equity investors require quick returns in high growth industries. As a result, many of Modesto California’s microenterprises rely on high interest private loans, credit cards, and payday/title loans to start and grow their operations. Modesto’s non-profit alternative lenders have had difficulty being effective in this environment, as has project host Fresno Community Development Financial Institution (Fresno CDFI). This project aimed to establish a revolving loan fund for micro-entrepreneurs left out of mainstream financial markets through an innovative and collaborative approach that leveraged local partnerships to increase access to capital and technical assistance. After ten months of development, the Grow Modesto Fund was formally announced by Modesto’s Mayor Marsh on August 27, 2015. This paper explores the challenges and successes met by the team that developed the Fund and looks at preliminary indicators of how effective the Fund may be in growing jobs and businesses in Modesto. (Author abstract)