CornerSquare Community Capital: Building a resilient small-business ecosystem

Supporting entrepreneurs across the state has always been a core commitment of the NC Rural Center, ensuring that they have access to the critical resources and financing needed to start, develop, and/or expand their businesses. Over the years, this work has taken on many different forms, and in 2020, these efforts expanded to include the launch of CornerSquare Community Capital.

CornerSquare is a partner and resource for Community Development Financial Institutions (CDFIs) and Minority Depository Institutions (MDIs) that is specifically designed to increase investment in communities through small-businesses and entrepreneurs that have seen decades of underinvestment. “CDFIs and MDIs lend to primarily women and minority-owned businesses, low-to-moderate income individuals, and individuals in low-to-moderate income census tracts,” says CornerSquare Executive Director Armeer Kenchen.

CornerSquare purchases a participation in loans originated by CDFIs, which helps mitigate lending risk and ensures that the lender has more capital to make additional loans to unserved and underserved entrepreneurs. “CDFIs have been undercapitalized for decades, and CornerSquare’s model helps infuse more funds to these incredibly vital financial institutions,” says Kenchen. Ultimately, by investing in CDFIs and building out their capacity to deliver funds directly to entrepreneurs, CornerSquare is enabling them to be more resilient and sustainable, and serve more small businesses and entrepreneurs who may not qualify under traditional underwriting.

“Often, borrowers from low-wealth communities are put into a tough scenario where they put everything they can into a deal, which often leaves them exposed to using high-interest credit cards or other options to cover their cash flow needs,” says Kenchen. CornerSquare’s support of CDFIs also helps reduce the amount of equity a borrower needs to bring to the table, which allows them to retain more of their existing assets for working capital and other needs. “For many borrowers, including those from lower wealth communities, this is critically important.”

Kenchen says that creating a more robust and resilient small-business ecosystem isn’t the only thing that happens when CornerSquare purchases a loan participation from a CDFI lending partner. “That one act sets off a chain reaction that we can trace from CornerSquare to the community that surrounds a small business.”

For Pineville, West Virginia-based entrepreneur, Jill Hendrick, CornerSquare’s support of her loan through Partner Community Capital (PCAP) helped her acquire a set of condominium units she could convert into tourist lodging to meet the demands of Pineville’s changing economy. Pineville, once a coal-dependent economy, now relies on the tens of thousands of tourists drawn to the region each year by the Hatfield-McCoy trails, an 800-mile network of ATV trails that run through southern West Virginia.

Hendrick says that without the Hatfield-McCoy Trails, her rental properties and restaurant would not have been able to grow. “The Trails have transformed the town. While so many rural places in West Virginia are losing population, Pineville has people coming—and staying,” Hendrick says. “So when you hear the trail riders coming into town in the morning, it’s just this beautiful roar. It’s the sound of our economy coming back to life.”

And for Charlotte, North Carolina-based entrepreneur, Edmund Washington, CornerSquare’s support of his loan through PCAP gave him the financing needed to expand his business and open a new franchise location of the luxury men’s barbershop, No Grease. Washington believes in supporting emerging entrepreneurs while he is also growing and expanding as a small-business owner. He gives his lead barbers a 10 percent equity in the business and helps them learn the day-to-day of managing a business, in addition to allocating space in his No Grease location for an emerging entrepreneur to offer manicure and nail care services.

“PCAP and CornerSquare believed in me and what I could accomplish,” says Edmund. “In the middle of a pandemic, when so many places are closing, I’m in the position to expand and elevate the business.”

CornerSquare Community Capital was founded by an initial $40 million investment from Truist and operates in a 17-state region and the District of Columbia. To learn more about CornerSquare, visit their website.