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Supporting small business: Pine Bluff's Good Faith Fund selected as recipient of SBA loan.

Small business has been hailed as the backbone of America. In recent years, however, owners and managers of small businesses in depressed areas such as southeast Arkansas have found it more difficult to obtain capital.

Additional attention is now being paid to the needs of small businesses through programs that specialize in what are known as microloans.

One particular microloan project is drawing national attention.

The Pine Bluff-based Good Faith Fund has been praised for its efforts to generate small businesses in the Delta.

Since the program's inception in 1988, the Good Faith Fund has loaned more than $148,000 to 69 borrowers with a default rate of 3 percent. The effort has sparked at least 30 related projects across the country.

In June, the program received an added boost.

Sen. Dale Bumpers, D-Ark., announced that the Small Business Administration would launch a new microloan program and provide $15 million during the next three years for projects such as the Good Faith Fund.

In fact, the Good Faith Fund sparked the federal assistance program.

"The whole idea came from a radio story I heard about a woman in Pine Bluff who got $2,000 to buy a stove so she could expand a catering business," says Bumpers, chairman of the Senate Small Business Committee.

The Good Faith Fund, established by Southern Development Bancorporation Inc. of Arkadelphia, offers loans of less than $5,000 to prospective small business owners in a seven-county area of southeast Arkansas.

No collateral or credit history is required. Repayment is insured through small "borrowing groups" that provide support to members.

The Good Faith Fund and Southern Ventures Inc. of Arkadelphia combine to form the non-profit Arkansas Enterprise Group.

A Rural Emphasis

According to the Small Business Committee's John Lyford, 30 programs nationwide were selected to receive funds through the new SBA program. An emphasis was placed on rural areas.

The Arkansas Enterprise Group was selected as the state's sole recipient.

The Good Faith Fund will share $750,000 in loans and $150,000 in grants with Arkansas Manufacturing Services of Arkadelphia, which offers loans to small manufacturers in 32 counties of south Arkansas.

Bumpers says the funds may be used for start-up loans or to support training in business skills for borrowers.

"The program is aimed at getting low-income people and those who have been on welfare into business for themselves," Bumpers says.

Lyford says the concept originated in October.

"It's already the most sought-after program in the SBA," he says.

Funds will be distributed to participants in about two months, Lyford says.

Executive Director Julia Vindasius says the Good Faith Fund will use the money as a supplement to existing capital.

"It's a program to support what we're already doing, not necessarily to start new programs," she says.
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Title Annotation:Small Business Administration
Author:Harper, Kim
Publication:Arkansas Business
Date:Jul 6, 1992
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