Christie Vymazal

Christie Vymazal and her partner turned to the Rising Tide Community Loan Fund to help launch the Flying V food truck and the Flying V Poutinerie. Photo: Christa Neu

A ‘Rising Tide’ of Support for South Side Businesses

The university recommits to loan program that aims to help small businesses flourish.

Story by

Mary Ellen Alu

As a senior finance major at Lehigh, Michael Roth ’12 took the lessons he learned in the classroom to Community Action Lehigh Valley and its Rising Tide Community Loan Fund, which provides loans to small businesses on South Side Bethlehem and beyond.

The internship experience, he says, proved eye-opening. With guidance from Christopher Hudock, associate executive director of business development for the fund, Roth helped review loan applications, pitched marketing ideas and more.

“I learned that a loan is valuable [to small business startups],” he says. “I learned that support is transformational.”

Aware of the counseling, marketing assistance, technical help and significant loans that the Rising Tide Community Loan Fund provides to small businesses, Lehigh has recommitted for five years—after an initial 10-year commitment—to the program. That means its initial $250,000 loan to Rising Tide will continue, in turn, to help fund loans to entrepreneurs and potential small businesses owners—as well as provide experiential learning opportunities for Lehigh students and potential jobs for graduates. The loans have so far supported new restaurants, a grocery store, salon, brew pub and other small businesses that have helped reinvigorate the South Side.

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.

Lehigh Economics Professor Todd A. Watkins

Since its inception in 2001, Rising Tide has loaned more than $12 million to small businesses, providing more than 300 loans to 261 businesses.

At the same time, a number of Lehigh students have interned at the nonprofit, learning the real-life ins and outs of microfinancing. Roth, for example, says the experience a decade ago helped set him on his career path. He’s now co-CEO of Next Street, a firm that mobilizes capital, customers and capabilities for small businesses and entrepreneurs, and in 2021, was interim head of the U.S. Small Business Administration.

Todd Watkins

Todd A. Watkins

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.”

poutine

The Flying V sells the Canadian dish poutine (French fries with cheese curds and gravy).

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.”

Flying V Food Truck

The Flying V Food Truck

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.”

Flying V Poutinerie building

The Flying V Poutinerie is located on Third Street in South Side Bethlehem. Photo: Holly Fasching

As a student at Lehigh, Roth remembers having brought his conceptual skills to his Rising Tide internship, then learning from Hudock about the realities that entrepreneurs face.

“That's one of the real benefits of Rising Tide Community Loan Fund being local,” says Roth, who was also president of Lehigh’s microfinance club as a student. The principles of the loan fund “actually understand the cultural context, the context of the neighborhood, the context of those small business owners, so that they can underwrite loans in a way that actually makes sense for those entrepreneurs.”

For the small business owners, the loans provide an opportunity to fulfill their dreams, earn a sustainable wage and better control their work/life balance, Hudock says. For Lehigh interns, the program provides the opportunity for practical experience: evaluating business plans, assisting business owners with cash flow projections, reading and understanding credit reports, and analyzing a business loan application.

Students also learn life lessons, he says. “They get to see the impacts of their decisions on one's personal credit. They get to learn the actual impact of lending and the need for budgets.”

Read more stories on the Lehigh News Center.

Story by

Mary Ellen Alu

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