Amy Hereford is the President and CEO of LiftFund, a nonprofit that has already made more than $1B in loans to small businesses since it started in 1994. Its mission is to offer financial resources and services to uplift small business owners, and it may become the new best friend of Los Angeles’ fire recovery.
Hereford delves into the microlending trends and the firm’s swift emergency/disaster response for small businesses. Within one week of the L.A. fires, LiftFund made loans to several local businesses.
Amy believes small businesses are essential to recovery. “Those are the families, the taxpayers that we need to make sure stay afloat, otherwise, a community begins to unravel.”
TRANSCRIPT
Tracy Williams: Welcome to TalkPR. I’m Tracy Williams, and today our guest is Amy Hereford. She’s the president and CEO of LiftFund, a nonprofit fueled by more than a billion dollars in small business lending. Its mission is to help finance support services, and it may become the new best friend of Los Angeles Fire recovery. So Amy, tell us how you can help, because we sure do need it.
Amy Hereford: Oh, gosh, well, and that’s what we are, mission-driven to do. LiftFund is 30 years old. We were formed by a former nun, actually, who a section of nuns from Latin America, recognized that the United States needed to help alleviate poverty through microloans. That is what LiftFund has been doing, microloans. Our average size loans nowadays are around $20 to $30,000. When COVID-19 hit, LiftFund was tapped to get access to capital out to the communities that needed it most, very quickly. So we built a skill set of hundreds of millions of dollars that have come through LiftFund. It’s been a trusted source that came from the federal government, state level, and municipality level. That’s what we did when we got and built that fraud infrastructure that comes along anytime you have that type of emergency. What we realized is that we are also available to respond to every type of disaster, business interruption, and so on. So when we find folks who need it very quickly, that’s what we specialize in, especially on the small business level. We’ve got to help them quickly. So that’s how we can be of service. Anytime there is a wildfire, whatever type of instance that is causing a business interruption in California, we are more than happy to come, and that’s what we did.
Tracy Williams: So this is so interesting because micro lending, I think we think about it from stories on 60 minutes of giving, tribes, or certain countries’ women a phone so that they could conduct businesses, it was at that level. So this is outside money, you know, Latin America, stuff coming to give to the wealthy United States. So that’s something I think people don’t know even exists.
Amy Hereford: It’s true. Well, in whatever level you are, it, you certainly will have poverty and one of the best ways to help alleviate that poverty, a way that has earned itself a Nobel Peace Prize, is not LiftFund personally, but Grameen, where micro lending is done, in India, has that Nobel Peace Prize. And it is for the type of work that we do that is very effective at helping to alleviate poverty. If a world without something like LiftFund looks like a boondoggle for predatory lenders, that’s what essentially happens. Not everyone will be bankable instantly. Not everyone who wants to start and pursue their dream will be bankable, and that’s just not feasible. But what is available is safe and responsible capital. It’s one of the, we hate to say, the best-kept secrets in the United States. There are nonprofit lenders out there, and the goal is to help administer technical assistance, in other words, financial literacy training, and we do loans until we’re ready, and graduate them into the regulated banking system.
Tracy Williams: When it gets to LA, I think we’re all looking about, where does real recovery really start? You know, it was very exciting getting lots cleared out and doing all of that, and the promise of fast-tracking. And, I’m sure you know that the number that is in all of our minds is 100, and that’s the number of permits that have been issued for buildings. And we’ve got 10s of 1000s of structures and only 100 permits. So there’s a lot of concern about it. So, where do you think recovery really starts?
Amy Hereford: In our 30-year history of helping with disasters, what we have found is there is a gap in understanding, and essential, and certainly in funding of what’s needed. We have to help small businesses. Sometimes we’ll get pushback. Well, we want to help individuals first, and the truth is the small businesses are individuals. Those are the families that work there. Those are the taxpayers. Those are funders that we need to make sure they are staying afloat there. Otherwise, what you have is an unraveling community. If we can’t help the small businesses and the data says, the national data says, if we don’t help them, within the first two weeks of a disaster, 40% will permanently close, and another 25% will close within that first year of a disaster. This is where we need to concentrate a lot of efforts, right away. In general, and you had asked, you know, how long does this go on? Well, from a small business disaster relief standpoint, what we need immediately, in the first two weeks, is to start getting funds directly into their pockets. So that they can pay their employees. Otherwise, the employees have to uproot families, change school districts, and look for work in other communities. It totally changes the social and economic fabric inside of a community. So once we do that, immediately, in two weeks, which is typically going to be grants, is what they need, not debt, not loans, right there. After a few more weeks, as folks stand up and you’ve hit the businesses and ICUs and so to speak, then it needs to change to low-cost loans for them so that they can stand up and rebuild. In order to do that anywhere in the United States, there just isn’t enough groups doing that, and they’re not enough groups able to do it because of the fraud that comes anytime you’re doing disasters. So we’re looking at, you know, from the time a disaster hits, in order to stand up a small business, the first year is critical how a community reacts. Thereafter, a community can expect it will be a couple years.
Tracy Williams: Part of what we’re also experiencing many of the small businesses that have been hurt, also because we’ve had all of the ICE raids and demonstrations on top of the fires. Who is it that you can help when you come here?
Amy Hereford: So our typical portfolio is the micro businesses. So these are your landscapers, these are your food trucks. These are your mom and pop restaurants. When we think about the Palisades, for instance, fire, when that happened, it wasn’t just the local main street businesses there. It had a deep ripple effect into other communities that rely on Palisades for economic support and so on.
Tracy Williams: Certainly, landscaping, you just named a big one.
Amy Hereford: Yes, exactly everybody. So, so that is who we are able to help instantly. So when we have in our own portfolio, we help folks with ITINs. These are folks that are our taxpayers. So they do have a number. They do file with IRS. And you know, of course, we ask for social security numbers and so on from other folks who are not ITIN holders. That’s important in a disaster, because there will be bad actors coming. And the more public this disaster, the more fraud attempts you have around the world to try to pose as these small businesses, and the, you know, these small businesses are vulnerable to that, to identity theft and so on. So, yes, there are still things we need in order to hit who we’re trying to hit. It’s about funding. We’ve got to have funding, because at this point, we haven’t hit deep enough yet, and we need, we absolutely need to offer these micro, low-cost loans so that they can keep making up the difference for the revenues lost, the inventories lost, and so on. They’re still trying to climb out there.
Tracy Williams: So do you have a number in mind? Like, how many people? Well, maybe a couple of numbers. How much money do you have to offer as microloans, if you can share a range with me, and then how quickly can you get these funds out to people?
Amy Hereford: Yes. I’ll put a caveat. So, where I get capital is from banks, and the way that they’re incentivized to do that for a group like mine is because they get community reinvestment act credit through the federal government now. So I do have pretty good, maybe we’re serving about 30 million a year in loans if that’s the case, though, whenever there are disasters, we are pigeon-holed on where we can serve until I can get funding in that area. So while I have capital to lend out, I have to lend it out at an interest rate that’s a fair interest rate. But where you want it in a disaster is really as close to zero as possible. In order to get that as close to zero as possible, I need grants to be able to do that. Right now in Los Angeles, we’ve exhausted our grants to buy down the interest rate. That is what I’m needing right now from Los Angeles, is I need a contribution where I have the capital to lend out, but I need a one time contribution, at least, to buy down the interest rate to 0% so that these folks on the ground are not taking on debt with interest in the time when they really need, you know, low interest loans.
Tracy Williams: So that means you can’t lend money until you get those loan rates down. Is that correct?
Amy Hereford: Yeah, we can lend, but it’s not as helpful to those small businesses at a 10% rate. They really need it at 0% so yes, we would need to buy down that interest rate, and it’s about a one-to-four ratio. So if I’m looking at doing $400,000 worth of loans, which, if we just roughly say, that’ll help 400 businesses or so on, now we’re talking about, I need 100 $1,000 just to buy down the interest rate to help those businesses.
Tracy Williams: Oh, that’s interesting. Well, you know, simple math, right? You know it’s funny, like, how do you not compete? It’s not a competition, obviously. But you know, the SBA is supposedly lending to fire victims for rebuilding. I’m sure that has something to do with supporting small businesses, because if you own a home and you build it, you’re gonna have to hire all these small businesses contractors. And what those are 2% loans. It seems like, wow, they’re giving 2% loans to rich people. And I don’t know if that’s true or not. What is the story behind that? I’m not saying that they’re doing it easily.
Amy Hereford: The SBA is effective, and they are very cash-strapped too. So there is not enough funding for what they are doing as well, right? And so where we feel that there’s a gap is to be the bridge between when somebody has a disaster in their community and until SBA can leverage funds to them. So that’s the important gap that we are filling now, six months after a disaster, SBA is there and has loans that they’re making, and you know, they’re also, they also all of us, could always use more staff, but it’s all the numbers game, right? So SBA is probably doing the best they can at this point in time, but of course, more partners in that community are going to make more change and affect more impact there. So SBA, we both. We both are aware of each other. We both partner on many programs together. We both support one another’s efforts so there is no sort of competition between us and SBA because we share the same mission. They’re helping small businesses. We’re trying to help small businesses. So we root each other on, and we certainly know that both of us need to exist in a space because there is so much need. I’m
Tracy Williams: So lucky to have you and your organization fighting for this and speaking as an Angeleno. Thanks for bringing hope.
Amy Hereford: Oh, thank you. It’s our honor to be able to be of service there. So thank you. You’re.
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