SOCIAL TOPICS (Archive): COMMUNITY DEVELOPMENT INVESTING

Published, July 2000

       by Jane Blume

       When customers walk into Unique Cakes by Karyn, Karyn Castillo’s shop in Albuquerque’s mainly Hispanic and low-income South Valley area, they are immediately impressed by the samples of her creations on the display shelves. Elegant, elaborate wedding confections and unusual specialty cakes in shapes such as an authentic looking fisherman’s creel or a traditional southwestern pueblo, evoke “oohs” and “ahs.”

       The visitors are not usually aware that Karyn was born on the eastern end of the Navajo Reservation in Cuba, New Mexico; that she spent two decades perfecting her cake baking and decorating skills while working for others; that she started her business in her home in 1997; and that her enterprise received an important boost with two loans from a non-profit alternative lender, the New Mexico Community Development Loan Fund.

       Karyn used the first loan to purchase a freezer and two display cases; then she moved her business into a commercial space. The second loan provided funding for a booth at a local bridal fair, where she made two critical connections to a department store bridal registry and a hotel wedding service. Today, Karyn receives a steady stream of referrals from these sources, and the wedding business accounts for half of her income.

       Unique Cakes by Karyn is one of 18 Native American-owned and managed businesses and non-profit organizations that have received financing and technical assistance from the Loan Fund. They include such enterprises as the Shi Beegashii Cooperative, a group of 10 Navajo livestock herders in the northwest part of the state; the Acoma Pueblo Boys & Girls Club in central New Mexico; and Kaa Dasita, an arts and crafts retail shop on the Mescalero (southern) Apache Reservation.

       These enterprises — and all of the Loan Fund’s clients — provide a social benefit, which can include jobs at good wages for low-income individuals, services to disadvantaged individuals, affordable housing, and the preservation of traditional communities. Social benefit, in fact, is a requirement for lending and an integral part of the Loan Fund’s mission.

       Members of the New Mexico Conference of Churches founded the Loan Fund in 1989. Concerned about the 23 percent poverty rate in the state, they wanted to create a model of grassroots development to help low-income individuals gain control over their economic destinies. Since the first loan was made in 1990, the alternative lender has awarded 316 loans totaling more than $7.7 million to small businesses and non-profit organizations throughout the state.

       The Loan Fund’s initial investors were several orders of Catholic nuns. Since then, contributions to its growing pool of loan funds (now over $9 million) have come from a Jewish congregation in Santa Fe, local banks, foundations, the U.S. Treasury (the Loan Fund is a Treasury Department certified community development financial institution), and individual investors.

       Ninety-seven percent of the Loan Fund’s loans have been repaid; one reason could be its unique technical assistance program. All clients receive free technical assistance, which ranges from training in bookkeeping to help with developing a marketing plan or achieving non-profit status.

       Karyn Castillo has received such support from the Loan Fund, and she believes that it has been critical to the success she has achieved to date. “The Loan Fund has helped me with every aspect of my business,” she says. “I don’t think I could ever have gotten this far without them.”

       Jane Blume is Owner/Principal of Desert Sky Communications in Albuquerque, New Mexico. Her firm provides public relations services for small- business and non-profit clients, including the New Mexico Community Development Loan Fund.