The vast majority of businesses don’t require $50,000 to launch. Most don’t even need $20,000. Most entrepreneurs are like #b#Noel Castellanos#/b# of Philadelphia, who made a go of his insulation business with a $3,000 loan to purchase some insurance and new tires for his truck. For the thousands of entrepreneurs like Castellanos, our nation’s banks offer little but a shrug and a laugh. Until recently.
In 2008 two Rutgers seniors, #b#Rohan Mathew#/b# and #b#Joe Shure#/b#,— entrepreneurs themselves and still wet behind the ears, began to change all that. Opening their non-profit entrepreneurial center in a New Brunswick church basement, they began to break down the marble-walled barriers that have traditionally fenced out small startups. Today the Intersect Fund has offices in New Brunswick and Trenton, helping small firm owners obtain microloans and offering a broad menu of business aids. Mathew will present “Micro Loan Financing for Low-Income Entrepreneurs,” a free SCORE workshop, on Thursday, March 25, at 6:45 p.m. at the New Brunswick Library. Visit http://bit.ly/dBTPZc to register.
Mathew credits his parents for the boost that thrust him into the business arena. Both working for Proctor and Gamble, Mr. and Mrs. Mathew began their family in Cincinnati, Ohio. As transfer opportunities came about, they moved with young Rohan to Singapore. Today all three live in New Jersey, where Rohan’s father operates his own management consulting firm and his mother works for Dun & Bradstreet.
Mathew and Shure met during their junior year at Rutgers as editors of the school’s Daily Targum newspaper.
In 2007 they hatched the Intersect Fund idea, and in 2008, six months before their graduation, they opened their doors. So far more than 150 clients have availed themselves of Intersect’s training, tech support, classes, and infusions of microloan launch-funding. Now headquartered at 109 Church Street in New Brunswick, the firm is besieged by holders of small or only dreamed-of businesses from in (and far out of) town.
#b#The bank’s vault.#/b# Shortly after this recession, New Jersey Bankers Association co-president John McWeeney announced: “The good news is we are now lending again at the same standards as before this downturn. The bad news is most companies will not be able to meet those standards.”
Unfortunately, one-person startups, like the dirt-poor hillbillies of the 1930s whose poverty was already so great that they never knew the Great Depression had come and gone around them, were left in a lurch they didn’t know existed. Banks’ traditional, collective policy was to exclude micro-loans because, frankly, there was no money in it.
“It takes the bank as much time and cost to process a $3,000 loan as a $50,000 loan,” explains Mathew. “Loan officers say small loans simply aren’t worth their time.”
Additionally, banks require a two-to-three year financial history — a formidable hurdle for a recent immigrant or a citizen whose business exists only in his heart, mind, and a one-page summary. Such loan guidelines are scarcely arbitrary. Banks have shareholders and directors anxious for the greatest return on each dollar loaned. Like any business, they look to keep operating costs down, and the maximum funds circulated to clients with the best odds of repaying fully, on time.
#b#The micro-advantage.#/b# It was this very need for new loaning opportunities and solid repayment assurances that made New Brunswick area bankers turn their ears toward Mathew and Shure. Here were savvy young businessmen who had taken the time to back and prepare these small businesses in a way that bankers could sell to their boards and shareholders.
They helped entrepreneurs like #b#Janis McMillan#/b#, founder of Everything and More, whose sole proprietorship offers a godsend to busy homeowners. She will come to your house, wait for the cable guy, watch the kids, have dinner waiting — whatever you need. The duo also helped inventive souls like #b#James Crandel#/b#, whose JNC Enterprises buys unwanted cosmetics stock from major stores and passes immense savings on to its customers.
Under the Intersect Fund umbrella, such entrepreneurs can obtain help with business plans, get a logo, and a website that costs less than $500 that the entrepreneurs can fully operate themselves. They may take up to eight business-launch classes for $150. Intersect has also worked out an agreement with the major credit bureaus to furnish data that will allow clients to purchase cell phones and other tools.
By the time the entrepreneur enters the bank with an Intersect escort, the attitude is different. Bankers see the relationship that has developed as Intersect staffers have taught the entrepreneur bookkeeping, helped find him customers, and begin to establish a track record. Much of the Intersect client funding comes from Citibank and Johnson & Johnson grants. But many bankers, like MagyarBank CEO #b#John Fitzgerald#/b#, have realized that while this is not their standard market, Intersect is offering a new pipeline to a new opportunity.
#b#Enterprise haven.#/b# “Being an entrepreneur is a very lonely and often scary proposition,” says Mathew. To allay such fears, business people frequently come through the doors of the 109 Church Street office just to meet other business people. In addition to the formal classes, Intersect Fund holds social get-togethers where ideas get swapped.
Here you might meet #b#Rhonda Hamilton#/b#, whose Nick and Pin Nostalgia can have you dressing and accessorizing as elegantly as she, for a surprisingly affordable price. Along with its many chefs, caterers, and food specialists, Intersect also hosts specialists like glassblower #b#Sean Lewis#/b#. In his early 20s Lewis founded On Center Glass, where customers may not only witness exquisite pieces being made at the furnace, but they may try their hand (and lungs) at creating their own paperweight.
Some day banks might do what they were originally designed to do — provide funding for the businesses that form our nation’s backbone. Until that time, they may work through the Intersect Fund and win both for themselves and the community’s businesses.