At a glance
- Sussex County, DE, needed strategic and innovative thinking to leverage business-development opportunities in the competitive Delmarva Peninsula.
- Sussex County Economic Development (SCED) formed a powerful partnership with Discover Bank and Grow America. The collaboration secured a $6,250,000 capital contribution that generated nearly $25 million in financing to support new, expanding, and relocating small businesses.
- SCED’s collaborative spirit and focus on impact, accessibility, and sustainability have created a best-in-class model for economic-development agencies around the U.S.
Meaningful partnerships, measurable impact
With 25 years leading the University of Delaware Small Business Development Center in Sussex and Kent County Delaware, and a decade as a small business owner in the region, Bill Pfaff had a vision to evolve SCED into an agency that truly benefited the small business community and the region. He also recognized that the kind of financing program he envisioned would take a major infusion of capital and a level of lending expertise that most economic-development agencies either lack or don’t have in sufficient capacity, including SCED.
SCED turned to partners who could fill the resource and knowledge gaps: Discover Bank for a capital contribution and Grow America for origination, underwriting, closing, and loan-servicing expertise in the small business market. This partnership has created measurable and region-wide impact while eliminating common barriers to success that otherwise undermine economic-development initiatives.
The opportunity
As the largest county in Delaware and one of the fastest-growing regions along the eastern U.S. coast, Sussex County had tremendous potential as a business-centric hub and optimal conditions for entrepreneurial growth: proximity to major metropolitan markets, robust population growth, and exceptional quality-of-life metrics.
Like many regions with significant potential, Sussex County also faced a fundamental challenge in creating and implementing accessible business development and financing opportunities that truly made a difference for entrepreneurs. Bill found challenges in three critical areas: securing adequate small business financing, ensuring small business owners could access and benefit from loans, and implementing effective lending processes.
Key collaboration: Grow America, SCED, Discover Bank
Based on years of experience as a small business owner and advisor, Bill’s approach to economic development transcended conventional models. Rather than simply administering programs, he created a comprehensive entrepreneurial-support ecosystem, making SCED something of a “one-stop super-shop.” He understood how to identify loan-ready businesses and assist with loan packaging and projections, as well as when to let other experts step in. This resulted in a powerful dynamic and a supportive entrepreneurial community.
Key to all of this has been the cornerstone of Bill’s approach: A groundbreaking partnership with Grow America, a nationally-recognized community development financial institution (CDFI), and Discover Bank, the region’s leading bank. This strategic alliance created a lending and loan servicing collaboration that resulted in the region’s most substantial bank-backed capital contribution—exceeding $18 million—dedicated to providing low, fixed-rate financing for the region’s small businesses.
Results and impact
By leveraging each partners’ specific areas of expertise, SCED and Grow America overcame a significant challenge that many economic-development programs face: implementing loan programs that have measurable impact when and where they’re needed most, without the need to create in-house lending capabilities.
With SCED leading outreach to small businesses, the agency leveraged millions of dollars to benefit business owners and the community. And by partnering with Grow America on structuring, underwriting, and long-term servicing of the loans, SCED addressed a critical lack of knowledge in running a lending program and eliminated a barrier to the program’s success.
The end result is nearly $25 million in lower-cost loans leveraged to:
- Generate and preserve hundreds of high-value local jobs
- Facilitate numerous strategic business launches, expansions, and relocations
- Democratize access to capital and offer the lowest fixed rate possible within the Sussex market at the longest term possible, which enables business owners to super-charge their operations with additional savings that are freed up from debt repayment.
- Generate a renewable source of funding to live on in perpetuity: As loans are made and funds extended to viable businesses, they’re paid back and relent to other deserving businesses.
- Establish a replicable model for economic development.
A replicable model for economic-development agencies
Today, the SCED model is distinguished by a comprehensive approach that includes the capacity to bridge the divide between complex financial requirements and the needs and experiences of small business owners.
Grow America works with economic-development directors across the country and a question we often hear is, “How can we bring the most value to our county and business community?”
The answer is to ensure that there’s cash available and to also understand your end-users: your business community and your lenders. Figure out the best way to help businesses access capital, then find ways to support lenders as they work to strengthen small businesses throughout their communities.
Follow this example and you’ll get there. Grow America can help, too.