In its second major investment in a local community development finance institution in the past year, Pinnacle Bank has granted $5 million to small business lending association BrightBridge Capital to support more lending in the economically underserved neighborhoods in the Chattanooga area.
BrightBridge intends to deploy the funds over the next nine months to provide market-rate or below-market-rate loans to small businesses, startups and nonprofit groups working on affordable housing and development. economy in low-income areas. The loans will be given to businesses unable to obtain conventional financing and can be used to start or expand their activities, create jobs or provide affordable housing stock.
“We realize we need to do more to close the wealth gap by providing more resources to our small business community,” Craig Holley, Chattanooga Market President for Pinnacle Bank, said Tuesday after presenting an oversized check from $5 million to BrightBridge executives. “It’s a lasting source of capital to help grow our community. If you find a thriving community, you’ll most likely find a vibrant small business at its heart and that’s what these types of partnerships help support.”
Since 1981, BrightBridge has worked with startups and existing businesses to bring jobs, business goods and services, and low-interest loans using a variety of small business administration programs and private donations and investments. in low-income areas. In a statement, Bill Pollard, chief executive of BrightBridge, said that as a not-for-profit organization, BrightBridge’s bottom line “is measured by the positive impact on the communities we serve.”
Closing the Wealth Gap
But BrightBridge is not a charity. By working with the customers it serves and often providing lower cost loans, BrightBridge has been able to maintain high levels of loan repayments on its loan portfolio of over $300 million.
“The funding provided by Pinnacle will be transformational for small businesses and entrepreneurs in Tennessee and Georgia,” Pollard said in a statement. “We are very proud of the successes of our customers and the impact of their success on our shared economy.”
One of the likely recipients of additional funding from BrightBridge is City Fields, a 4-year-old community development company working to revitalize the community of Blythe Oldfield near downtown Cleveland, Tennessee. The 700-house neighborhood was developed as a working-class community a century ago for workers at the nearby Magic Chef (later Whirlpool) appliance factory before Whirlpool eventually moved out of downtown it ten years ago.
The area is one of the poorest census tracts in the region, but because it’s close to revitalizing downtown Cleveland, it offers rich potential for working-class housing if it remains affordable.
“This partnership with BrightBridge provides us with greater flexibility and will expand our ability to purchase and provide more affordable housing,” Dustin Tommey, executive director of City Fields, said in an interview on Tuesday. “Affordability is really tough for a lot of people right now.”
Only around 40% of homes in Blythe Oldfield are owner-occupied, but BrightBridge funding for City Fields is expected to help most low- and middle-income families be able to buy homes in the area.
Tommey said his group was working for $500,000 in loans through BrightBridge to help pay for the purchase and renovation of some of the vacant or distressed homes in Blythe Oldfield.
The agency and its predecessor task force that was part of Cleveland United Way have already helped improve the energy efficiency of 413 homes through a $4.7 million TVA Extreme Energy Makeover program and have bought, remodeled and sold 13 homes to qualified low-income buyers. Ten more are being redeveloped and Tommey said funding from BrightBridge should allow for even more housing redevelopment, as well as support for related labor and economic development support services by City Fields. .
For its part, Pinnacle will get credit from the Community Reinvestment Act for the $5 million loan to BrighBridge, as well as tax and franchise benefits that Tennessee enacted under former Governor Phil Bredesen to encourage banks to use their capital to help businesses in underserved areas.
Pinnacle Bank, which acquired the former CapitalMark Bank in 2015 and grew its loan portfolio in the Chattanooga and Cleveland markets to $1.6 billion, made a similar $5 million investment last year to help entice Pathway Lending, Tennessee’s largest nonprofit community development finance institution, to reopen an office in Chattanooga last summer.
Holley said Pinnacle is primarily a business-oriented bank with just three offices in Chattanooga and one in Cleveland. But he said the bank is eager to grow small businesses and startups in communities across Southeast Tennessee to help create more bankable business opportunities as more communities thrive.
“Partnership is one of Pinnacle’s values, and we know it’s what helps build and strengthen communities,” said Holley.
Contact Dave Flessner at firstname.lastname@example.org or 423-757-6340. Follow him on Twitter @dflessner1.