Small-business lender expands in central Indiana

Flagship Enterprise Center, the state's largest Small Business Administration microlender, has more than doubled its footprint and now serves a hefty chunk of central Indiana.

The Anderson-based not-for-profit, which makes business loans at levels far below most banks, recently earned SBA approval to operate in 24 central Indiana counties, up from 10. The expansion comes on the heels of the Indy Chamber moving to bolster its role as a microlender in a largely uncharted frontier of finance.

"Since we had been getting referrals from [lenders in] those counties anyway," Flagship loan program manager Adam Hoeksema said, "we thought we should just ask to see if we can add them."

Prior to the expansion, Flagship could lend to businesses in Marion, Hamilton, Hancock, Madison and Shelby counties in the Indianapolis metropolitan area, as well as nearby Delaware, Grant, Henry, Rush and Tipton counties. The additional 14 counties include Boone, Hendricks, Morgan and Johnson counties, which round out the metro area's so-called donut.

Since starting operations in 2005, Flagship has repeatedly led the state in SBA microloans made, including 2014 when it made 49 of the 65 loans. Behind Flagship was Accion Chicago Inc., with 8.

Microloans range from about $500 to $50,000, and business owners with subprime credit have used them to start franchises, make repairs and the like. Flagship's average loan amount is $13,000, and its average borrower FICO score is 625.

Flagship, which also serves as a resource center for entreprenuers and small businesses, has more than $2 million in capital. Including non-SBA loans, it extended 72 loans totaling $1.07 million in 2014.

A majority of Flagship's loans are in Marion County, where the Indy Chamber's microlending division—the Business Ownership Initiative—resides.

Flagship and BOI have made referrals to each other, and their officials have suggested that, given high microloan demand, there's more than enough room in the market for both.

It's unclear if that will remain the case as both organizations grow. BOI has about $1.9 million in capital, some of which it can lend outside of Marion County. If the SBA approves its pending application to become an SBA microlender, BOI could immediately add close to another million dollars in capital and lend in eight counties.

Julie Grice, Indy Chamber's vice president of entrepreneur services, said BOI expects to get an SBA decision soon. The organization extended 24 non-SBA loans in 2014 totaling $691,900.

"We’re pleased with the growth of the program last year," Grice said in an email, "and with $300,000 in our loan pipeline right now, we anticipate the momentum to continue in 2015."