A ‘Rising Tide’ of Support for South Side Businesses

Lehigh’s recommitment to the loan fund is “a good thing to do for the community,” says Lehigh Economics Professor Todd A. Watkins, a long-time Rising Tide board member and executive director of the Martindale Center for the Study of Private Enterprise at Lehigh. Additionally, he says, a thriving, robust environment well serves the university’s students, faculty and staff.

As an accredited, nationally recognized community development financial institution (CDFI), Rising Tide specifically assists low- and moderate-income people who wouldn’t qualify for a more stringent bank loan, as well as those who are starting or expanding a business in a low- to moderate-income census tract such as the South Side. Applicants seek microloans under $50,000 or larger loans of up to about $150,000.

“Often these are very viable businesses that can employ people and bring some business activity, employment activity, economic activity to regions of the Lehigh Valley that wouldn't otherwise have that injection of capital,” Watkins says. “Rising Tide will look at somebody’s full credit record; they’ll look at the business; they’ll look at warts and all.”

Individuals in a low-income census area and those considered to be low- or moderate-income often lack the resources and assets that a bank requires for funding, Watkins and Hudock say. Sometimes banks can’t see beyond the complicating factors that might be in entrepreneurs’ credit history, such as situations impacted by illness or the pandemic, they say.

“So on paper, they don't look like a good credit risk,” Watkins says. “But Rising Tide takes that credit risk and tries to help out. There are lots of little businesses all over the place that have been helped by the funding that comes in, and many of them, in the end, pay back their loans and go on and have pretty good businesses.”

While more than 50% of small businesses fail after five years, Hudock says, more than 80% of the small businesses that received Rising Tide loans remained open after five years.

To receive funding, applicants must submit a business plan and other paperwork. Most times, applicants are required to have collateral to support the five- to seven-year loans. Interest is slightly higher than a traditional bank loan.

After operating a pop-up tent to sell the Canadian dish poutine (French fries with cheese curds and gravy) at breweries, festivals and other events, Christie Vymazal and her partner wanted to purchase a food truck to expand operations.

They had sought a traditional bank loan when they first launched, but, she says, “everyone laughed in our face because ‘zero experience’ and it’s a risky industry in general.”

They turned to Rising Tide, after learning about the program from a fellow small business owner, and received help with a business plan and other paperwork as well as received a five-year loan to open the Flying V Food Truck. At the time, Vymazal says, the loan “was imperative … to be able to do what we wanted to do.” The loan was paid off in eight months.

She says they again reached out to Rising Tide for a larger loan to additionally purchase a building on Third Street in South Side Bethlehem to open the Flying V Poutinerie. They signed the lease on the building in March 2020, right before the height of the pandemic, and had to do major renovations. Since then, in addition to the poutinerie, they operate an upstairs music venue. Lehigh students are among their clientele and employee staff.

“We wanted our own space.” Vymazal said. “We decided on Bethlehem, specifically South Bethlehem. We love the community.”