Valley Partners to Use PPP Fees for New Fund

YOUNGSTOWN, Ohio – Valley Partners plans to use fees it made by facilitating Paycheck Protection Program loans to launch another revolving loan fund for small businesses, its executive director says.

“We look to use that money as match funds for grants to get the revolving loan fund started, so we can have more access to capital for the types of projects out there,” says Teresa Miller.

“Our successes are taking the small guys and helping them grow and helping them start,” she says.

Miller began working in April 2006 for what was previously known as Mahoning Valley Economic Development Corp. She became its executive director in January 2020, two months before the COVID-19 pandemic changed daily life.

“Quite a good time to become the boss, right?” she says good-humoredly.

Valley Partners is a federally designated Certified Development Financial Institution that offers financing through the U.S. Small Business Administration, the Ohio 166 loan fund and other programs.

The private nonprofit corporation was established in 1978. It targets deals that aren’t as enticing to traditional lenders, Miller says.

“If someone has a 560 credit score because of a medical condition or something else, we can be a little more creative in taking character into account and say this person has a great business plan, the personality to pull it off and the gusto to do it,” she says.

Valley Partners’ ultimate goal is to help companies build their businesses and credit rating so they can later go to a financial institution and secure traditional financing.

“It’s great that we’re here and that we’re an asset to the community to help with more creative financing packages and help those that may not be able to go to a bank,” Miller says. “We, of course, still love to partner on the larger deals with our banking partners. But we like to also focus on those in the underserved markets.”

As the pandemic took hold, Valley Partners – formally known as Valley Economic Development Partners – shifted its focus from lending money to new customers to helping those already in its portfolio.

The agency offered interest-only payments or deferred payments, Miller says. In addition, it helped local governments distribute COVID-19 relief to businesses.

Fortunately, she says, Valley Partners had switched to cloud-based computing in January 2020, which permitted staff to work remotely during the mandated shutdowns early in the pandemic.

“We had a few glitches to work out. But we were lucky that we had made the technology change right before everything hit or we wouldn’t have had access to anything because we were required to stay at home,” Miller says.

Processing PPP loans affected Valley Partners in other ways. One was that it earned the organization “a lot of money in 2020 and 2021,” Miller says.

Some businesses it worked with on PPP funds have come back for additional funding, and built a relationship with the organization, she adds.

Participating in the coronavirus assistance programs also helped to “get us out in the community and made people more aware of who we are and what we do,” she says.

In February, Valley Partners reported nearly 300 total loans worth just under $67 million. Its loan delinquency rate is about 0.4%, which has been consistent the past two or three years, Miller says. 

The organization also participates in Valley Growth Ventures, a local venture capital fund. And it provides technical assistance to customers through a business coach on staff, such as helping a startup with its business plan or alerting an existing business to cash-flow issues. 

Most recently, on Feb. 17, Valley Partners approved financing for Voyager Specialty Coffees & Teas. The company is renovating the former Dave’s Auto Parts building on Mahoning Avenue and an adjacent building for a production and distribution center. 

Two other recent loan recipients – the Youngstown Flea and Penguin City Brewing Co. – invested in projects in the east end of downtown Youngstown.

When the pandemic forced the monthly outdoor Flea events to go on hold, founder Derrick McDowell used the time to work on the business model. He knew he wanted to move the monthly event for makers into a building from the downtown parking lot where he had been operating. 

McDowell began to explore loan and grant options but found that his business didn’t fit the requirements for the programs he was researching. Then he was introduced to Valley Partners.

Having already gathered the necessary financial documents, “It was just a matter of trying to articulate to them the vision,” he says.

While the loan committee looked at the financial information, “It was really looking at the potential of the project,” he says.

McDowell ultimately borrowed $250,000 from the SBA loan program Valley Partners administers and bought the former Northeast Fabricators building in October 2020.  

“We helped him buy the building and be able to expand and grow,” Miller says.

McDowell says Valley Partners worked with him and walked him through the process and kept in constant contact to point out funding opportunities, including the coronavirus aid grant he received.

“I won’t tell you that they are your conventional method of funding,” he says.

“I’m just thankful that the Flea fit into their model of opportunity.”

Not far from the new Flea site, Penguin City bought the former industrial warehouse at 460 E. Federal St. in December 2020, where it is establishing a brewery, taproom and event center.

The brewery reached out to Valley Partners that summer, co-founder Aspasia Lyras Bernacki says.

Staff worked with the company on projections, how much the project would cost, how much money Penguin City could borrow and how it would repay its loans, according to Lyras Bernacki. 

Valley Partners “helped us from start to finish,” she says. It regularly checked in to ensure things were going OK.

“You could tell they care about the project,” she says. “I could call them whenever and ask them about anything we’re dealing with.”

In all, Penguin City ended up borrowing nearly $3 million through Valley Partners for the project, which Premier Bank is financing.  

“That was a very exciting project,” Miller says. “It was another fun project to work on.”

Pictured: Teresa Miller says Valley Partners is able to provide “creative financing packages” for small businesses.