‘Micro-loan’ saved LIC business owner

Because she would have had to pay for the bags on delivery from the factory, but couldn’t cash in the orders until she’d actually shipped the goods, Chernoff was in a catch-22.

In business for only two years at the time, Chernoff said the banks she went to for loans wouldn’t extend money to her because she didn’t have “three years of financials.”

With time running out before she’d lose all her orders, Chernoff turned to the Tory Burch Foundation, a nonprofit that helps women entrepreneurs, who in turn connected her with Accion USA. Accion specializes in “microfinance” and “micro-lending.”

Microfinance is a growing financial industry focusing on lending small loans to low-income or unsalaried lenders.

It is also the subject of a new bill being proposed by Congresswoman Carolyn Maloney (D-Manhattan and Queens). The bill would give federal grants to organizations certified as “community development financial institutions” in an effort to establish loan-loss reserves. These reserves would help leverage private investment to provide small businesses with loans of up to $25,000.

In Chernoff’s case, Accion not only loaned her the $22,000 she needed in just three weeks, but also helped put her books in order.

“They sat with me one afternoon for over four hours,” she said, “going through my shoeboxes of receipts.”

Chernoff added that it’s small businesses like hers that have fueled a manufacturing resurgence in Long Island City, since Portchester, for example, can only handle small orders.

Contracting the factory is “more economical than going to China,” she said.