Why Start a Loan Fund?

We know first-hand how hard it is for entrepreneurs in north Alabama to find capital – that’s why this fund is so important to ending a root cause of hunger: poverty.

After approaching 40 different lenders for a construction loan without success, the Food Bank and partners postponed efforts to start a worker owned grocery store in 2010 that had financial support from the City of Huntsville and the USDA in addition to sweat equity from a network of local farmers and a neighborhood association. The project would have created jobs, access to healthy food choices in an underserved community and supported local farmers. While the timing of the project coincided with the worst economy since the Great Depression, we also learned that conventional banks find it difficult to loan to borrowers whose financial condition is subject to the seasonal cycles of agriculture.

We learned that if we want access to credit for innovative enterprises that strengthen our local food system, we will have to create that credit ourselves. This experience was the catalyst for the fund named in honor of Dick Hiatt,– who led the Food Bank for 28 years and inspired us with an exciting and pragmatic sense of what is possible.

In the short run, the fund creates access to credit for food and farming entrepreneurs and helps them build relationships with conventional lenders as they grow their businesses.

In the long run, the Hiatt Fund enabled our partner Neighborhood Concepts, Inc. to evolve into a Community Development Financial Institution (CDFI) that serves North Alabama and invests in neighborhoods in economic distress.

CDFI’s are nonprofit lenders dedicated to underserved communities. A recent report from the Federal Reserve Bank of Richmond shows a correlation between poverty and limited access to credit. The report found that states with the lowest personal income per capita have the fewest number of CDFI’s. It ranks Alabama’s CDFI assets in the bottom three of all southern states.

This program is an element of the Food Bank of North Alabama’s proactive strategy to find solutions to hunger and poverty in North Alabama.