NewCorp: moving business forward in New Orleans and beyond
Few agencies or organizations have done more to help small, minority businesses in the New Orleans and neighboring area than the NewCorp Business Assistance Center.
Since its inception, NewCorp has been on the forefront of community and small business development initiatives in the City of New Orleans. It has directly financed the start-up of over 100 new businesses, created and saved nearly 3,000 jobs and helped more than 3,000 businesses recover after Hurricane Katrina. In addition, NewCorp has directly deployed over $25 million in loans, grants, and developmental services into businesses primarily in New Orleans and the surrounding metropolitan area. Pretty impressive, especially considering its humble beginning.
NewCorp Business Assistance Center was founded on October 15, 1995 as a result of the City of New Orleans’ agreement with Harrah’s Casino to fund economic development projects after its approval for land-based gaming. Harrahs’ funded a five-year, $1.25 million grant to create NewCorp Business Assistance Center. NewCorp, Inc. used the five-year funding to create an Open Access Program designed to identify, prepare, finance and support small businesses and entrepreneurs as they endeavored to participate in the mainstream of New Orleans business and financial activities. In a nutshell, it was and still is the mission of NewCorp, Inc. to be an economic development catalyst by providing technical and financial assistance to small and emerging businesses to improve their basic business capabilities by way of training, counseling, planning, providing financial products and services. And helping lead the charge is Vaughn R. Fauria, NewCorp president and executive director.
When Fauria joined NewCorp in the last quarter of 1997, one of the first things she did was an analysis of the organization’s strengths, weaknesses, opportunities and threats. The SWOT analysis clearly showed there was a great need for NewCorp.
“However, the need for access to capital was much stronger than it was to help people do business plans or even read contracts. Construction and suppliers were the basic clients NewCorp was reaching out to then because it was all designed to operate and sustain itself well after Harrahs’ completion,” said Vaughn. “These people would most certainly get the work as a result, but that didn’t include any money, like mobilization or anything like that, that most minority contractors need in order to even bid for the job.”
So she believed the little money they had should be set aside so NewCorp could start making small loans. She then started looking for revenue sources to start a lending program because no one was giving minority contractors access to capital. She was pleasantly surprised to see that “poor people paid their loans,” giving them the ability to make even more loans.
Eventually, on November 28, 2001, NewCorp was officially certified as a Community Development Financial Institution. The CDFI Fund was authorized by the Riegle Community Development and Regulatory Improvement Act of 1994. The CDFI Fund provides relatively small infusions of capital to institutions that serve distressed communities and low-income individuals. CDFIs are specialized financial institutions that work in market niches that have not be adequately served by traditional financial institutions. CDFIs provide services that help ensure that credit is used effectively, such as technical assistance to small businesses and credit counseling to consumers. Since becoming a CDFI, NewCorp’s bank is about $14 million strong, having started at zero, Fauria said.
NewCorp is also a Small Business Administration micro-lender. They borrow the money from the SBA and loan it out. The CDFI money is granted to NewCorp strictly for lending purposes so they make the loans, then collect it and put it back into a revolving loan fund.
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