Better Know a Deal: Crafting a Better Banking Landscape

By: Nikita Singhal - Jul 16, 2014
Source: F.B. Heron Foundation

Craft3 uses an innovative financing model to enable small businesses to thrive and create jobs in the current economy.

The 2008 recession re-shaped the retail banking landscape. Many smaller community banks have been acquired, and large national banks now command an even greater share of the market. Those that remain bear vastly expanded costs of regulatory compliance that challenge profitability and increase the rates they charge to borrowers. As a consequence, many borrowers who previously qualified for loans from banks now find themselves without access to credit.

What this means is many historically stable small businesses have had limited access to traditional commercial funding sources, undermining job growth and economic recovery. Luckily for small businesses in the Pacific Northwest, there’s Craft3, a leading nonprofit non-bank Community Development Financial Institution (“CDFI”) committed to strengthening economic, ecological, and family resilience.

Saxton Bradley Inc. (SBI), a 25-year-old specialized furniture and equipment supplier in Renton, WA, was one small business struggling in this ecosystem. Due to a few years of declining revenues and a loss in the most recent year due to the recession, their bank asked them to find alternate financing. SBI’s business plan for increasing revenues, plus their backlog and pipeline, showed the revenue trend reversing, but no other means of financing were available for this local employment-generating business.

J.P. Francis & Associates in Kent, WA, is a mechanical contracting company that was in a similar situation. Struggling for financing due to the recession, they heard about Craft3 and immediately applied for a loan. Craft3′s Seattle Business Lender, Walter Acuña, explains:

"Just looking right now at projects that are coming, they have over $20 million in projects currently. That’s already an outcome. Business is going to become healthier, and the more healthy the business, the more people they hire. Those are the outcomes that we’re looking for."


Enterprises like Saxton Bradley and J.P. Francis present a large opportunity to Craft3 to finance “formerly banked” businesses and help them recover from the recession and return to their traditional banking relationships. In 2011 it addressed this market need by creating Craft3 Capital Corporation, an innovative financing model and an alternative to traditional funding sources available to most CDFIs. Craft3 Capital Corporation is a wholly-owned for-profit subsidiary of Craft3 that leverages capital from Washington +State’s Small Business Credit Initiative with private investment to help enterprises like these continue with business as usual as they stabilize revenue trends, return to profitability and retain local jobs.

A J.P. Francis employee.

A J.P. Francis employee.


To support this work, Heron committed $5 million in a $32 million 6-year syndicated loan facility in Craft3 Capital Corporation where Wells Fargo is the Sole Lead Arranger. This facility is expected to close by the end of July. The six syndication members will have senior claims above all other debt obligations to the Craft3 Capital Corporation, and will be secured against the Capital Corporation portfolio’s assets. Heron hopes Craft3 will set the new industry standard for a diversified CDFI business model, reaching new currently underserved customers and further leveraging its capital to create more impact in low-income communities across America. We expect 4,000 jobs to be created and/or retained over the life of the investment.

For more inspiring Craft3 investment turnaround and job retention stories, watch Craft3’s videos about J.P. Francis & AssociatesFort George Brewery + Public HouseGreen Zebra Grocery and more.