Modesto, CA, August 28, 2024 - The City Council approved a Modesto Forward Grant agreement using American Rescue Program Act (ARPA) Funds of $1 million with Valley First Credit Union for two revolving loan funds that will expand capital access for small businesses in Modesto: business incentives and business beautification. The City’s collaboration with Valley First Credit Union represents a significant step towards addressing the financial barriers that have historically impeded our local businesses.
Revolving Loan Funds
The first revolving loan fund is for the Main Street Business Development for $500,000. This fund is designed to support typical business financing applications including operating capital, equipment purchase, property purchase and expansion. The second is for the Main Street Beautification loan fund for $500,000, which will provide financing for blight remediation, business façade improvements, historic preservation, and masonry reinforcement.
Leveraging the community-centered approach, Valley First Credit Union will provide crucial initial funding and administrative backing as they identify and finance qualified borrowers for small business expansions and community-driven sustainability projects that are complemented by financial education and flexible loan terms. Both revolving loan funds will provide loans at 5% below Prime Rate, with a minimum rate of 2.5%. As these loans are repaid, the funds are reinvested by being lent out to other small businesses in the community.
“We consistently hear from our local businesses about the need for expanded access to financing. This partnership with Valley First Credit Union will create opportunities for them to access the funding they need in Modesto,” says the Mayor of Modesto, Sue Zwahlen. “This kind of support is incredibly valuable to the small businesses in the community.”
Improved access to capital has been identified as a critical initiative for local business resilience. Research by Stanislaus 2030 showed that capital in the county is highly concentrated in large commercial banks. During and after the pandemic, the loan market has experienced increased qualification requirements, most affecting small businesses. Rising interest rates post-pandemic have further stressed small business financing.
Valley First Credit Union loans would range from $2,500 to $75,000 with repayment terms from 12-60 months. The Interest rates would be at five points below prime with a floor of 2.5% APR. Businesses can apply for this funding with the preferred amount and term to assist with the following activities.
Business Incentives Loan fund:
- Operating Capital
- Machinery and equipment purchase
- Acquisition of land and building
- Building expansion\
- Niche programs – i.e., Stanislaus 2030’s Home Childcare License Initiative
Expand Beautification Loan Fund:
- Blight remediation
- Façade rehabilitation or enchantment
“We are looking forward to working with Modesto to add two new revolving loan funds to increase capital access for our underserved community members and their small businesses,” said Kathryn Davis, President, and CEO of Valley First Credit Union.
The Business Development and Beautification loan funds are anticipated to be capitalized and ready for customer applications in January 2025. Valley First Credit Union will also offer bi-lingual coaching and financial education services through their Business Services Team including workshops, webinars, and one-on-one technical assistance.
Press Release Contact
Sonya Severo
Public Relations and Legislative Affairs Manager
209-497-0075
Email Sonya Severo
