Sep. 21—In a potential boon for Kern's small business community, Bakersfield-based Valley Strong Credit Union has filed an application to open the county's second locally based community development financial institution.

Valley Strong's CDFI, if approved by the U.S. Department of the Treasury, would set up a revolving loan fund that could tap a wealth of financial sources that are otherwise inaccessible to startups and local business owners overlooked by conventional lenders.

The CDFI would help achieve an objective of the B3K Prosperity economic collaboration, which in 2020 identified lack of access to capital as a primary obstacle for small-business success in Kern. It found that local residents ranked first among comparable U.S. regions for starting a business, but that the county placed last by share of startups surviving past nine months.

Valley Strong President and CEO Nicholas "Nick" Ambrosini said he anticipates receiving federal approval by year's end that would allow the credit union to begin operating the CDFI in the first half of next year. At that point, the organization would begin "putting businesses in front of resources that can help them be successful," he said.

Added Deanna Blaise, Valley Strong's senior vice president of member business services, "It's only going to prop up the community."

Different CDFIs focus on different ways to help their communities, such as supporting specific types of projects. Ambrosini said its CDFI could expand later to serve other goals but that its immediate aim would be to provide early-stage capital for small businesses that have been unable, for a variety of reasons, to secure a business loan.

Kern's first locally based CDFI received federal approval in the spring: Ridgecrest-based AltaOne Federal Credit Union was certified to serve low-income populations in Inyo, Kern, Los Angeles, Mono, Orange, San Bernardino and Tulare counties, as well as Arizona's Mohave County. Other CDFIs operating in Kern are based outside the county; they are Fresno-based Access Plus Capital and Modesto-based Valley First Credit Union.

B3K Executive Director John Paul "JP" Lake emphasized local businesses and entrepreneurs need access to capital if they are to sustain growth and generate quality jobs.

"We were excited to see AltaOne become the first Kern County-based CDFI earlier this year and are equally excited about Valley Strong's application," Lake said by email Wednesday. "The need is great, and we look forward to strengthening access to capital in Kern County."

A roughly 20-strong consortium established by B3K to promote establishment of a locally based CDFI concluded that such an organization's target market should be minority-owned businesses and those whose proprietors are low- and moderate-income entrepreneurs in Kern.

A member of the group, Apollo Consultancy Group CEO Angel Cottrell, said there should be an educational component to CDFIs' lending activity to ensure business owners have the knowledge and tools they need to make the best of the money they receive.

Assuming that all comes to pass, the new CDFI would slow the rate of local business failures, which would contribute to greater employment by a segment of business that federal data shows provides the bulk of employment across the country.

"Growth doesn't happen without money," Cottrell said, adding that the organization's potential "is huge."

At least three other organizations had expressed interest in possibly helping form a CDFI in Kern. Ambrosini said Valley Strong was in the strongest position to move forward because of its reach, experience and designation as serving low-income areas. The credit union owns assets totaling some $4 billion, and it serves more than 270,000 members across the Central Valley.

"We informed that group we are always willing to carry that flag should we be the best choice to do that," he said.