Multibank organization helps center city businesses get started

An increasing number of business ventures have taken place in center city during recent years, and some business owners credit Springfield Finance & Development Corporation for their success.

Brian Fogle, SFDC treasurer, described the corporation as a multibank community development corporation. It was organized in 1997 to help with the redevelopment of center city.

Center city is defined by SFDC as an area bordered by West Bypass, National, Kearney and Grand, Fogle said.

"It's a pretty big area, although predominantly most of the things we've done have been in the downtown area," Fogle said.

Within the last five years, 18 businesses have benefited from SFDC loans, he said. Those 18 loans total nearly $671,000, and two recently approved loans, which are pending contingencies, could soon bump that total to more than $1 million, Fogle said. "These are projects that probably wouldn't have happened without SFDC being involved," he said.

When SFDC was organized, community improvement efforts had already led to the development of the Urban Districts Alliance. UDA is an umbrella organization whose purpose is to promote economic development within the center city areas of downtown, Walnut Street and Commercial Street.

"(SFDC) was seen as one more tool that could be utilized to help make projects happen in the center city area," Fogle said.

Eric Zackrison, owner of Agrario's at 311 S. Patton Ave., said word of mouth led him to contact SFDC.

"We were pretty close on our financing, but the (Small Business Administration) wanted us to have a little more for them to approve it. So we went to the SFDC to fill in that little gap," Zackrison said.

With SFDC's help, Zackrison was able to open his restaurant in October.

"We probably would've had a difficult time getting the money had it not been for SFDC," he said.

Fogle said SFDC began with $440,000 derived from an investment made by 12 local banks. The for-profit corporation is managed by a board of directors. The city of Springfield was supportive in the formation of SFDC and continues to provide administrative support, Fogle said.

"The city of Springfield was invaluable in making it all happen," Fogle said.

In addition to serving as a lender for gap financing, SFDC was also organized to provide equity for projects that need extra financial enhancement, Fogle said. However, the corporation has not yet provided such financing, he added.

It is often more complicated for businesses to find backing for center city ventures, Fogle said, because refurbishing a building is a bigger challenge than building something new on a bare piece of ground.

"You don't know what you're going to run into," Fogle said.

Additional tools such as historic tax credits and the city's loan program are available for center city projects, Fogle added.

Most downtown projects have several more layers of financing than conventional commercial development, Fogle said.

The first loan granted by SFDC was to Robert and Lauren Nava, who opened Artworx salon at 938 E. Walnut St.

Robert Nava said they purchased a house in the historic district with the intention of converting it into a salon, but operating expenses were not figured into their budget.

"That's where (SFDC) came in. They helped bridge the gap between acquiring the business and starting it," Robert Nava said. "They really helped out a lot. I can't say enough about them."

After opening, Artworx won recognition from Modern Salon magazine for its interior design.

"It was just a really good deal for us," Robert Nava said.

Fogle said the corporation accepts a higher degree of risk on most project loans because it is in a secondary position.

"There will be a bank ahead of us, and we're secondary. Since it is gap financing, we do take a higher level risk, but so far so good," he said. "It has worked exactly how we had hoped it would work."

Fogle said he has spoken to people in Joplin who are interested in starting a similar corporation. Preliminary discussions also are taking place to form a regional corporation to help smaller communities, since SFDC is limited to Springfield.

"I think we're realizing capital plays a key role in redevelopments and if we can offer one more tool to make these things happen, the area benefits," Fogle said.