A loan fund designed to help low- and middle-income people start their own small businesses got a $600,000 shot in the arm from the Community Development Financial Institutions Fund.

The money will be used as cash reserves to help cover losses when borrowers default on their loans, according to Kathy Ricci, CEO and executive director of the Utah Microenterprise Loan Fund.

She said 12 percent of her agency's loan recipients default. By having a solid cash reserve for loan losses, banks and credit unions are more comfortable loaning the Microenterprise Fund money to loan out to the fund's target audience.

The Salt Lake City-based Microenterprise Fund has$5 million in assets, Ricci said. Since 1993, it has loaned out $9.5 million to 700 recipients. Loans can be as much as $25,000, but the average is $13,000, she said.

The $600,000 grant from the CDFI Fund, which is part of the U.S. Treasury Department, "could allow us to increase the size of our loans to, perhaps, $35,000 to $50,000. Or, we could use it to help us expand into other areas of Utah."

The Utah Microenterprise Loan Fund operates in 11 counties, from Utah County north.

The Salt Lake Tribune