NEO Fund specializes in micro-enterprise lending.
Q: What is a micro-enterprise?
A: A micro-enterprise is a small business that has fifty or fewer employees and requires seed capital of no more than $50,000.
We work with bankable and non-bankable entrepreneurs who have an outstanding work ethic and willingness to be coached.
Q: What does it mean to be non-bankable?
A: bank·a·ble, adj. Guaranteed to bring profit.
Sometimes entrepreneurs without established business records have difficulty securing smaller loans for small and/or new businesses. Banks are typically prepared to provide larger loans because they have systems in place to manage their risks based on data. They do not have programs in place for ongoing training and technical support for managing the risk of many micro loans.
Being non-bankable means that the one looking to borrow could potentially lack experience, credit history, or sufficient collateral. It is important to note the differences in that NEO Fund, a micro-lender, looks at credit scores, assets, business plans, coachability, and character of the person (willingness to work with us through the process until the loan is paid in full). The borrower of a micro loan is expected to provide some personal equity and should be prepared to disclose all financial information to their lender before securing a loan.
Q: What type of loan does NEO Fund offer? What about interest?
A: It’s a loan just like all loans. NEO Fund lends money to a borrower, and takes a security interest in certain collateral (equipment, inventory, real estate if there is any), and also gets the borrower’s owner (if an entity) to personally guarantee the loan. Sometimes we consider taking a second mortgage on an owner’s home if the prime collateral is not sufficient. Then the loan is paid back over a term of years (ranging from 3 years to as much as 10 years).
It’s not free money, it comes with strings attached, and the interest rate is higher than what banks usually charge to creditworthy customers because our borrowers do not qualify for bank loans (due to lack of credit history, problems with credit history, lack of experience in business, etc.), and are therefore riskier borrowers. Plus, we provide more services than a traditional bank loan, in the way of technical assistance (coaching, mentoring, trouble shooting, classes, etc.).
Q: What does it mean to be “coached”?
A: Business coaching is a type of personal or human resource development. It provides positive support, feedback and advice to an individual or group basis to improve their personal effectiveness in the business setting.
We focus on borrower relationships with ongoing support for the duration of their loans.
Q: What kind of ongoing support?
A: The management team at NEO Fund facilitates monthly business workshops for training and support, one-on-one meetings that aid in sustaining business growth, encourages widespread networking within the Ashtabula area, and acquires certain financial progress indicators from borrowers to maintain ongoing interaction and to manage risks associated with micro-lending.
Our Mission Statement:
“The mission of New Entrepreneurs Opportunity Fund (“NEO Fund”) is to combat community deterioration and encourage economic development and job creation in the Ashtabula County, Ohio, area. To accomplish its mission, NEO Fund will operate as a micro-enterprise development lender for new entrepreneurs and existing small businesses in the Ashtabula County, Ohio, area.”
We host monthly Business Workshop Meetings that are open to all. From existing business owners to aspiring entrepreneurs with an idea, all are welcome. Find the next meeting on the NEO Fund calendar.