Business owners dip into capital: nation's top banks sponsor venture capital program for emerging entrepreneurs.Small business owners based in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of who are in need of debt or equity funding Equity funding An investment consisting of a life insurance policy and a mutual fund. The insurance policy is paid by the collateral value of fund shares, giving the investor the advantages of insurance protection with the growth potential of a mutual fund. can turn to the New York Community Investment Co. Formed by the New York Clearing House and its 11 member banks, the NYCIC is a $10 million investment fund whose managers intend to provide long-term capital to small businesses. Currently in its pilot stage, the NYCIC (212-693-0870) will eventually serve as a model for similar venture capital funds Venture Capital Funds An investment fund that manages money from investors seeking private equity stakes in small and medium-size enterprises with strong growth potential. Notes: nationwide. Prime candidates for NYCIC financing will be companies that lack an operating history or have insufficient equity to establish or expand new lines of credit. Special consideration will be given to small businesses located in low- and moderate-income areas or that are owned by minority or female entrepreneurs. "We believe the NYCIC will succeed in tapping the enormous potential for small business growth that exists in New York's neighborhoods," says Robert W. Davenport, president of the National Development Council, a not-for-profit economic development organization that works with small businesses in over 125 communities across the country. A board of managers made up of representatives from the New York Clearing House, the member banks and community organizations will oversee the NYCIC. NYCIC's 11 member banks are: the Bank of New York The Bank of New York, abbrieviated to BNY, was a global financial services company that existed until its merger with the Mellon Financial Corporation on July 2, 2007.[1] The bank now continues under the new name of The Bank of New York Mellon Corporation. , Bankers Trust The Bankers Trust is a historic American banking organisation that was acquired by Deutsche Bank in 1998. It was originally set up when banks could not perform trust company services. , Chase, Chemical, Citibank, EAB EAB Emerald Ash Borer (insect) EAB Environmental Appeals Board (EPA) EAB Educational Activities Board (IEEE) EAB Environmental Advisory Board EAB Egyptian American Bank , Marine Midland, Morgan, NatWest, Republic and U.S. Trust. "These banks strengthen the fund through the large equity base they have provided as well as through the services they will contribute to help reduce operating costs," says Jill Considine, president of the New York Clearing House and chairman of the NYCIC. She further notes that "the fact that investors are willing to accept a lower level of return on their investment [13% to 18%] enables the fund to provide small businesses with the capital that is so critical for growth and expansion opportunities--at an affordable cost." Business owners can seek financing of anywhere between $50,000 and $500,000. Essentially, there will be three types of financing, the majority of which will be equity or near-equity investment, which typically are subordinated loans with equity features. Other funds will go to not-for-profits (i.e., credit unions) that grant loans to small businesses. The remaining NYCIC financing will be available for equity mortgages for developers of small commercial properties as part of community redevelopment projects. To be eligible for NYCIC funds, "companies must exhibit growth potential and demonstrate sound and committed management," says NYCIC President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Howard Sommer Sommer is a surname, from the German and Danish word for the season "summer". It may refer to:
Historically, banks don't like to make loans under $50,000 because the cost to service small loans is the same as million dollar loans but less profitable, notes Sommer. The NYCIC is looking to assist an under-served segment of the business community, he adds.
NEW YORK INVESTMENT
FUND'S 11 MEMBER BANKS
The Bank of EAB
New York Marine Midland
Bankers Trust Morgan
Chase NatWest
Chemical Republic
Citibank U.S. Trust
Still, this isn't philanthropic giving, since the participating banks will make their money back in the form of equity. In addition, the 11-member banks will receive CRA See Community Reinvestment Act. (Community Reinvestment Act Community Reinvestment Act (CRA) Enacted by Congress in 1977, the CRA encourages banks to help meet the credit needs of their communities for housing and other purposes, particularly in neighborhoods with low or moderate incomes, while maintaining safe and sound operations. ) credit. The CRA was created in 1977 as an inducement for banks to provide credit services to low-income neighborhoods. Clearing House banks created the NYCIC in much the same vein as when they funded the Community Preservation Corp. 20 years ago. The CPC (1) (Central Processing Complex) An IBM mainframe that has two or more central processors (CPs) that share memory. It is the collection of processors, memory and I/O subsystems manufactured with a single serial number, typically all contained in one cabinet. has provided more than $1 billion for residential real estate development. The success of small business is critical to the city's economy, says Considine, the former managing director and chief administrative officer A chief administrative officer (CAO) is responsible for administrative management of private, public or governmental corporations. The CAO is one of the highest ranking members of an organization, managing daily operations and usually reporting directly to the chief executive of American Express Bank Ltd. and former New York State superintendent of banks. "The NYCIC will enable [small businesses] to take advantage of equity investments that they never had access to in the past." |
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