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Newly Launched Arvest Opportunity Fund Provides Loans to Small Businesses

6 min read

To get a loan from the Arvest Opportunity Fund, first you’ve got to face rejection.

Since May 2022, the fund has provided loans and lines of credit to businesses that fall just short of Arvest Bank’s business loan requirements.

Born as a passion project of Arvest Bank CEO Jim Walton, it’s now Hillis Schild’s baby, and she’s proud of it.

“We don’t want to be the kind of company that says you’ve been declined by Arvest, so go and talk to these other folks,” said Schild, the non-bank fund’s executive director. “We want a seamless process.”

Loan applications to Arvest go through underwriting under the bank’s policies, but would-be borrowers who are declined can still be solid candidates for a loan from the fund, Schild said. 

“We then underwrite the loan under Arvest Opportunity’s policies,” which are more forgiving.

In just 10 months of lending, the fund has provided $2.2 million in more than 100 loans, often to business owners keeping their steady jobs while striking out on their own, she said. 

“As banks get larger, you know, they have to be consistent in their loan policies,” Schild said. Good prospects for repayment don’t always check all the loan policy boxes. “So the idea was, how can we serve customers, starting with mostly small and micro businesses? How can we serve customers that as we have grown we’ve gotten a little bit above where they stand from a qualifying standpoint?”

Non-Bank Subsidiary

The fund is a wholly owned non-bank subsidiary to Arvest, which is based in Fayetteville. Schild, a banking veteran who worked for Arvest before leading the fund, works out of Little Rock. Loan recipients get special handling, including financial education for a year after loans are granted. The idea is to help entrepreneurs and veteran tradespeople get their businesses off the ground and build a credit file good enough to eventually meet Arvest’s traditional business lending standards, she said.

Schild, who grew up in Little Rock and graduated from Central High School and Ouachita Baptist University, says it’s important to give underbanked populations a fair chance. She’s on the boards or advisory committees of the Arkansas Access to Justice Foundation, the Arkansas Coalition of Housing & Neighborhood Growth for Empowerment, and the Arkansas Asset Funders Network.

So what makes the Arvest Opportunity Fund a non-bank?

“We don’t take deposits,” Schild said. “That’s basically it. You’ve heard of loan funds? We are more like that.”

Schild told Arkansas Business that the Arvest Fund offers a bridge of aid that can allow “these business owners to fully access the products and services they need to make their business grow and thrive.”

Schild, who joined Arvest Bank in 2019, took charge of the fund in November 2021, tasked with creating a small-business loan policy that is, as she put it, “a little below our best.” 

She normally doesn’t tell people exactly what the fund’s loan policy is because by the time they memorized it, “it might have changed,” she said.

But the fund looked closely at 30 months of business loans declined by Arvest, taking into account hurdles those customers face in getting approval. After making its first loan in May 2022, the fund adjusted its policies in August before taking the beta program bank-wide, then making more adjustments. “We now have some good approvals coming through, so we’re helping a lot of customers,” which was one of the fund’s goals.

“We looked at things like the credit files,” Schild said. “Some were new to credit, or didn’t have a credit score. Some applicants may have been in an industry for 10 years, perhaps in a management position, and are ready to go out on their own.” A lot of lenders require two years of business experience, but the Arvest Opportunity Fund adjusted its policy to include people with know-how “who want to start a side hustle that they hope will become their primary employment.” Including their existing wages in the equation helps get them accepted, Schild said, offering an example. 

“Think about a journeyman electrician who has worked in that field for several years but  wants to go out on his own,” she said. “But he needs appropriate equipment. He’s still working for his current employer, and our policy will allow for that,” factoring in his income.

Other customers went to online lenders for flexibility and found themselves paying high interest rates. “We’ve refinanced a lot of those loans for businesses with a lot of technology.”

The fund’s basic products are a line of credit secured by all company assets, loans for titled vehicles, and loans for equipment.

Customers in trucking may need a trailer or other equipment; other customers need vehicles or crucial equipment. “We’ve been lending to a lot of rural recyclers,” Schild said. “They need specialized trailers and trucks in order to conduct their business. We’ve made loans to customers in retail, marketing, all sorts.”

The fund allows its borrowers some leeway on their credit scores, and doesn’t factor in medical collections, for instance.

Education Required

Eileen Jennings, Arvest’s director of community lending and investment, has years of experience as a commercial banker and leads the day-to-day direction and administration of the Arvest Opportunity Fund. “Nothing about these businesses we are trying to help is small,” she said, calling them “huge undertakings for the people running them” and vital enterprises in their communities. 

She said part of the fund’s mission is to surround borrowers with trusted financial coaches and trained educators to improve borrowers’ chances for long-term success.

Schild said that entrepreneurs hoping to start their own businesses can’t put off their goals until business conditions are perfect. So the fund forges ahead with them.

“One thing the fund does a little differently is to require all of our customers to get technical advice when it comes to their credit,” Schild said. For that purpose, the fund partnered with Money Management International, a nonprofit credit counseling company.

MMI walks borrowers through budgeting, assesses their credit reports and “checks up on them a couple of times a month,” Schild said. “That check-in can be text messages or a telephone call, however our customers want it. They’re willing to meet borrowers where they are.”

They also translate financial literacy into more than 150 languages, including American Sign Language. “They’re the second-largest credit counseling agency, but they do a lot of other things, including small-business capacity-building webinars, and just education. They have the same concern for our customers that we do,” Schild said.

And borrowers rarely chafe at the oversight. “I think they appreciate just the opportunity to talk to somebody about their hurdles,” Schild said. “And though it’s early in the process, we’re getting some data back that shows credit score improvement. We don’t get that by individual customer, but in general, debts are being paid down and we’re seeing positive improvements within our customers’ financial profiles, which is the goal.”

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